General Motors Hit with Class Action Over Allegedly Deficient COBRA Notices

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A proposed class action claims General Motors (GM) has failed to provide employees with proper notice of their right to continued health insurance after they lose coverage due to a qualifying event.

Per the 20-page suit, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plan sponsors such as the automaker to notify plan participants of their right to elect to continue coverage after they’ve experienced a qualifying event, such as termination, that would cause them to lose their insurance.

The case alleges GM has “repeatedly violated” this statute by providing deficient COBRA notices that omit required information, such as the termination date for COBRA coverage and the identity of the plan administrator. Because the defendant’s notices are missing this critical information, they also violate the law’s requirement that election notices be written “in a manner calculated to be understood by the average plan participant,” the lawsuit argues.

“Without information on when COBRA coverage ends, and who is the Plan Administrator, the notice is not written in a manner calculated to be understood by the average plan participant,” the complaint reads (emphasis in original).

The lawsuit claims GM’s alleged COBRA violations have robbed plan participants and beneficiaries of their right to continued healthcare coverage.

The plaintiff is a Michigan resident who says she worked for GM as a design release engineer until her employment was terminated in February 2020. The lawsuit alleges that although GM sent the plaintiff a COBRA notice, the defendant did not use the U.S. Department of Labor’s model notice that contains the required information. Instead, GM sent a notice that omitted important details, including an explanation of the coverage termination date and the name, address and phone number of the plan administrator, according to the complaint.

The plaintiff claims GM’s COBRA notice “confused [her] and resulted in her inability to make an informed decision” regarding the election of continuation coverage. Per the suit, the plaintiff decided against electing COBRA coverage based in part on the alleged deficiencies in GM’s notice and lost insurance coverage for herself and her son as a result. The case claims the plaintiff experienced both financial harm, given she was forced to pay for her family’s medical expenses out of pocket, and emotional harm in the form of stress and anxiety as a result of the loss of her health insurance.

The suit looks to cover participants and beneficiaries in GM’s health plan who were sent a COBRA notice by the defendant during the applicable statute of limitations period as a result of a qualifying event (as determined by GM) and who did not elect COBRA coverage.

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