Health insurance is one of the most important benefits that an employer can provide to an employee. When employment ends, you may wonder if you can maintain your health insurance under the former employer’s health care plan. An employee’s right to benefits is another right that an employee has in addition to the rights and protections provided by other state and federal employment laws.
Laws Governing Health Benefits
A federal law governing health benefits, the Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, can help employees maintain their health insurance after being separated from their employer. Under COBRA, you might be able to pay the insurance premiums after you leave a job. This option offers you the ability to maintain your previous health insurance for at least 18 months after your separation from your employer. COBRA is part of another federal law known as the Employee Retirement Income Security Act of 1974, commonly known as ERISA.
Health Insurance Termination Notifications are Required by COBRA
COBRA requires an employer to provide notice to a former employee of his or her eligibility for continued health care benefits at the employee’s expense. In addition, if that employer terminates its health insurance coverage, the employer must provide notice to any eligible former employee regarding the termination of plan coverage.
This Case Involved the Denial of Health Insurance Benefits for a Cancer Patient
Recently, Kilgore attorney Nick O’Kelly won an appeal at the U. S. Court of Appeals for the Fifth Circuit regarding an employer’s notice requirements under COBRA. The Fifth Circuit hears appeals from the federal district courts in Texas, Louisiana, and Mississippi.
This Appeal for Health Insurance Coverage is Significant
The case is Hager v. DBG Partners, Inc. The appeal followed the district court’s dismissal of Hager’s claim based on its determination that Hager was ineligible for any remedy under ERISA. This appeal is significant. It presented the question of the availability of a remedy for a COBRA notice violation to the Fifth Circuit for the first time. This is known as an issue of first impression.
After Hager was terminated, he elected to continue his enrollment in DBG’s Blue Cross Blue Shield health plan through COBRA. He paid his insurance premiums while he received treatment for colon cancer. Unbeknownst to Hager, DBG had terminated its health care plan with Blue Cross Blue Shield before he underwent his medical treatment. Hager subsequently learned that he had not been covered when he had his treatment. So, he sued DBG for reimbursement of his medical expenses.
A Fact Question: Did the Former Employer Act in Good Faith?
The Fifth Circuit initially decided that Hager had standing to bring his lawsuit because he was a plan participant under ERISA. Next, the court determined that DBG was obligated to provide notice of coverage termination to Hager. DBG contended that it did provide such notice to Hager. However, the Fifth Circuit concluded that DBG’s alleged letter, alone, was insufficient to support the district court’s dismissal of Hager’s claim, and that whether or not DBG acted in good faith was a fact question.
Finally, in determining an issue of first impression, the Fifth Circuit held that Hager had a remedy for DBG’s notice violation under ERISA. Specifically, the Fifth Circuit found that a civil penalty under ERISA, 29 U.S.C. § 1132(c), is available to Hager for DBG’s alleged failure to provide him notice of termination of the Blue Cross Blue Shield health plan. This civil penalty can be “up to $100 a day from the date of such failure and such other relief as [the court] deems proper.” The district court, according to the Fifth Circuit, abused its discretion when it ruled that Hager was legally barred from obtaining a penalty award under ERISA.
Medical Expenses May Be Awarded as a Penalty
Some courts have awarded medical expenses as a penalty under 29 U.S.C. § 1132(c). The Fifth Circuit stated that it “can discern no barrier to the [district] court awarding the amount of Hager’s medical expenses as a penalty.”
The Fifth Circuit reversed the district court’s dismissal of Hager’s claim. The Fifth Circuit remanded the case for factual findings regarding DBG’s disputed good faith in providing notice of health insurance coverage termination to Hager. In light of those factual findings, the district court was instructed to determine whether a penalty should be awarded, and if so, the amount.
Was Your Employee Benefits Claim Denied?
Kilgore Law is a leader in employment benefits litigation. Some employee benefits are no longer being offered by employers or insurance companies. Some employers have become self-insurers. No matter who the insurer is, or whether your claim involves health insurance or short-term or long-term disability benefits, Kilgore Law may be able to help.
For decades, Kilgore & Kilgore has represented clients who were denied their employment benefits. If you have been denied health insurance benefits or other benefits that were offered by an employer, contact us by clicking here Contact Kilgore & Kilgore and filling out the form on our website to get the conversation started. To learn more about Kilgore & Kilgore’s Employee Benefits law practice, click here Kilgore Law Employee Benefits.