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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 19 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

 

Contact Info

The Wagner Law Group

 

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7121 Fairway Drive
Suite 203
Palm Beach Gardens, FL 33418

 

New York Office

Tel: (716) 650-5987

Fax: (716) 633-0301

333 International Drive

Suite B-4

Williamsville, NY 14221

 

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

 

 

September 27, 2012 

 State and Federal Law Alert

 

 

 

Employer, Not Insurer, May Be Liable for COBRA Coverage

 

 

 

A federal court was recently asked to determine whether an employer could liable for monetary damages when it erroneously extended COBRA coverage to an employee, even though the employer was exempt from COBRA because it had fewer than 20 employees.

 

In Hanysh v. Buckeye Extrusion Dies, Inc., a former employee sued his employer after his COBRA continuation coverage was retroactively terminated by the employer's insurer. In January 2009, the employer had terminated the employee's employment and provided him with a COBRA election notice. The employee elected COBRA coverage and paid the required premiums for 13 months.

 

For reasons undisclosed, the employee filed a complaint with the U.S. Department of Labor ("DOL") regarding his COBRA coverage. The DOL investigated the complaint and subsequently informed the employer that it was not subject to COBRA because it employed fewer than 20 employees. In response, the employer's insurer retroactively terminated the employee's COBRA coverage. As a result of the retroactive cancellation, the employee incurred over $7,000 in unreimbursed medical expenses.

 

The employee sued to stop the employer from denying his COBRA coverage. He asserted that the employer was liable for his medical expenses because he had relied on its material misrepresentations about his COBRA eligibility. The employer, in turn, said it had relied on the insurer's representation that the employee was eligible for COBRA coverage and that, pursuant to the terms of the insurance contract, the insurer was responsible for determining eligibility.

 

On review, the court determined that the employer could be liable for the employee's continuation coverage for the following reasons: (1) the employer, not the insurer, knew the exact number of persons it employed; (2) the insurance contract placed the burden for complying with federal laws such as COBRA squarely on the employer; and, (3) under the terms of the insurance contract, the insurer expressly disclaimed any warranties or representations that the employer's health plan complied with federal law.

 

This court ruling highlights how important it is for employers to fully understand the scope of their relationship with insurers concerning compliance with federal laws. Generally, insurers that provide group health coverage to insured plans do not know whether an employer purchasing such coverage is subject to COBRA. Most insurers merely package COBRA coverage as part of the overall coverage offering without even investigating whether the employer is, in fact, subject to COBRA. Likewise, brokers selling insurance policies may not know whether an employer is actually subject to COBRA.

 

To avoid costly administrative mistakes like the one in Hanysh, employers must clearly understand which laws actually apply to their businesses. To that end, employers should retain competent benefits assistance to assess which compliance obligations exist under COBRA and other numerous, and equally complex, federal laws that apply to group health plans.

 

 

 

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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.