A Tennessee-based trucking company has agreed to a settle a class action lawsuit that alleges it gave insufficient notice of the Consolidated Omnibus Budget Reconciliation Act (COBRA) to terminated employees. More than 2,000 employees were affected by the lack of notice regarding health insurance options after being terminated.
In February, FirstFleet of Murfreesboro, Tenn., agreed to settle for $386,000 in a lawsuit that was filed last May. Originally filed by a driver for the company, more than 2,000 former employees were included in the lawsuit.
Christopher Carnegie, a driver for FirstFleet, was terminated from his job in January 2017. According to the complaint, Carnegie lost his job for what is considered a qualifying event for purposes of COBRA coverage, not because of gross misconduct.
Carnegie did not receive his COBRA notice until September 2017. According to federal regulations, a plan administrator must provide a notification to qualified beneficiaries within 14 days after the plan administrator is notified of the qualifying event.
Additionally, the notice Carnegie received well past FirstFleet’s deadline was just a page taken from the company’s employee handbook rather than the COBRA notification that contains substantive information regarding how to elect COBRA, according to the lawsuit.
Federal regulations also require a plan administrator to provide certain information in the notice, 14 specific bits of information in total. Required information includes identifying the qualifying event, cost of continuation coverage, payment due dates and an explanation of the plan's procedures for electing continuation coverage. According to the lawsuit, FirstFleet failed to address all 14 points.
Due to the late and insufficient notice, Carnegie’s attorneys claim he was unable to obtain continuation coverage, causing him to lose his insurance and incur medical bills. The lawsuit claims Carnegie and others similarly situated suffered informational injury and tangible injury in the form of lost insurance.
“Besides a paycheck, this is one of the most valuable things employees get in exchange for working for any employer,” the lawsuit states. “Insurance coverage has a monetary value, the loss of which is a tangible and economic injury clearly giving rise to Article III standing.”
FirstFleet has denied allegations that the alleged COBRA notice was the correct notice sent to affected employees. The company also denies having violated any of the COBRA provisions. On Feb. 22, approval for a settlement was filed.
According to settlement documents, Carnegie and class members sought penalties in the amount of $110 per day from the date of failure of proper notification. FirstFleet eventually settled for the amount of $386,000, which includes Carnegie’s incentive payment up to $10,000 and attorney fees up to one-third of the settlement.
A third-party administrator of the settlement identified approximately 2,078 potential class members. Factoring in the incentive payment and attorney fees, class members will get approximately $100 each if all members collect.