Court Equivocates on Penalties for Timely COBRA Election Notices: Thibodeaux v. City of Atlanta

PDF

By: Colin Clark, Staff Attorney

Introduction

Timely COBRA notices are a fact of life for employers who offer qualifying coverage and are required to send COBRA notices. Generally, an employer must offer a continuation of coverage within 30 days after most qualifying events. Providing timely notices gives employees the information they need to decide what is best for them and their families, and sending a timely notice should be a part of every employer’s separation toolkit not only for compliance reasons, but also to aid employers in potentially avoiding future negative implications. Let us take a look at Thibodeaux v City of Atlanta, where the lack of a timely notice was recognized by the court – but – the court did not impose statutory penalties on the employer even though it was well within its discretion to do so. Failing to provide timely COBRA notices can lead to substantial penalties, and although this particular case concerned several areas of the law, this article will focus on the timely (or, as it may be, untimely) COBRA notice and what the 11^th Circuit had to say about the notice and the prospect of penalties.

The Case

Thibodeaux was employed by the city of Atlanta as an equipment operator for the public works department. After a series of events between Thibodeaux, colleagues, and supervisors, Thibodeaux was fired by Atlanta on February 21, 2021. The last day that Thibodeaux actually worked was approximately nine months earlier, on June 17, 2020. In July of 2021, Thibodeaux brought suit against Atlanta for (1) retaliatory termination and retaliatory hostile work environment under Title VII; (2) unpaid wage violations under the Fair Labor Standards Act; and (3) failure to provide timely COBRA notice. The record showed that the employer was at least aware that the likelihood of receipt of the notice was not guaranteed, as they mailed it to an old address. The court noted “the City had reason to doubt that the address was capable of timely delivery when it sent the notices of proposed and final termination in February 2021.”

The lower court found little merit to Thibodeaux’s claims, and while it recognized that a timely COBRA notice was not sent out, it decided not to impose statutory penalties on the employer, noting that Thibodeaux was not harmed as the city continued to pay for her health insurance premiums for nearly two years after Thibodeaux’s last day at work. Thibodeaux appealed to the 11^th Circuit, who affirmed the lower court’s decisions. In their opinion, the 11^th Circuit was clear that even though the employer was at fault for not issuing a timely notice, the decision to impose statutory penalties lies solely within the court’s discretion – regardless of whether the plaintiff is harmed or not, noting  “the trial court may undoubtedly consider whether a denial of information prejudice a plaintiff, but prejudice is not a prerequisite to an award of civil penalties.”

Practical Application and Considerations

While the lower court granted the defendant summary judgment on all claims, the lower court did agree with the plaintiff regarding the lack of timely COBRA notice even though they declined to impose statutory penalties for the tardy notice. The remaining question of potential statutory penalties was likely a large reason the case was appealed to a higher court. We cannot say that, absent the COBRA claim, that the case would not have been appealed and allowed to continue, but it certainly would have been something to consider when deciding to appeal the lower court’s decision. Perhaps a timely COBRA notice would have prevented further litigation in this matter, saving all parties a lot of time and money. So, while sending a timely COBRA notice satisfies the mere statutory requirement of sending a timely COBRA notice, it also has the potential to aid employers in avoiding other future complications.

Courts can impose hefty penalties of up to $100 per day from the date of failure to give notice. With that said, even if a plaintiff does not suffer harm from lack of a timely COBRA notice, courts are not barred from imposing statutory penalties against an employer. On the other hand, a plaintiff suffering harm does not necessarily mean a court will, or must, impose the penalties. Whether statutory penalties are assessed in the face of an untimely COBRA notice is at the court’s discretion – but sending timely COBRA notices mean an employer will likely never have to find out if a particular court will decide to impose those penalties.