Wal-Mart Sued Over COBRA Health Insurance Notices

(CN) – A former Wal-Mart employee claims in a federal lawsuit that the retail giant failed to properly notify its fired workers of their rights to continued health insurance coverage.

In a class action filed in the Southern District of Florida on Nov. 11, lead plaintiff Taffini Reed claims Wal-Mart violated federal regulations by sending deficient, non-compliant notices of COBRA insurance coverage options to employees who were fired or otherwise faced the loss of their group health insurance benefits.

According to the lawsuit, Reed worked for Wal-Mart for roughly ten years, as a human resource manager and market supervisor, before her employment was terminated in August.

Under rules tied to COBRA (Consolidated Omnibus Budget Reconciliation Act), Wal-Mart had to provide Reed with a notice of her and her family’s rights to elect continued health insurance coverage after her stint with the company came to an end.

Wal-Mart apparently sent the notice, but according to Reed’s lawsuit, it did not include the required information outlined in a Labor Department administrative rule known as 29 CFR 2590.606-4.

Reed’s complaint claims the COBRA letter she received from Wal-Mart was “confusing, ambiguous, and critical components, if included, are piecemealed throughout the notice rather than being made clear and understandable to the average plan participant.”

Among other deficiencies, Reed claims, the notice failed to clearly identify the COBRA plan administrator. Though the notice repeatedly mentions COBRA plan manager Conexis as beneficiaries’ contact point for insurance issues, the complaint claims the administrator is not “clearly and unambiguously” identified.

Reed also alleges the notice lacks an explicit explanation, required by the Department of Labor, that legal guardians can elect continuing health coverage on behalf of their children, and that covered spouses can elect continuing health coverage on behalf of all other beneficiaries.

Reed seeks class certification, alleging Wal-Mart engaged in widespread violations of 29 CFR 2590.606-4 and an underlying federal statute. The proposed class includes beneficiaries of Wal-Mart’s health insurance plans who, within the applicable statute of limitations, received a COBRA notice from Wal-Mart after a “qualifying event.”

“Qualifying events” triggering COBRA coverage for employees or their families include termination for any other reason than gross misconduct, loss of work hours resulting in the cancellation of health coverage, divorce (as to a spouse),  and death of the covered employee (as to family member beneficiaries).

In addition to demanding that Wal-Mart rectify its allegedly deficient COBRA notices, the complaint seeks statutory penalties “in the amount of $110 per day for each class member who was sent a defective COBRA notice” by Wal-Mart.

Generally under COBRA provisions, if an employer with a group health plan has more than 20 employees, it is obligated to provide employees who experience a qualifying event with continuing health insurance coverage for at least 18 months. Certain qualifying events such as a divorce or death can permit dependents and spouses to receive continuing coverage for 36 months.

Reed is represented by Luis Cabassa from the Wenzel Fenton law firm in Tampa, Florida.

A Walmart representative responded to the lawsuit in a statement provided to Courthouse News.

“We disagree with the allegations made by Ms. Reed and her attorneys,” the statement reads. “We will respond with the Court as appropriate.”

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