Target Facing ERISA Class Action Over Allegedly Deficient COBRA Notices [UPDATE]

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Target Corporation faces a proposed class action in which two plaintiffs claim the retailer failed to provide legally adequate notice and instructions regarding their right to continued health coverage upon the occurrence of a “qualifying event.”

According to the lawsuit, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires administrators of a group health plan to inform participants and beneficiaries of their right to continued health coverage upon the occurrence of a “qualifying event,” such as termination from a job. The plaintiffs, a former Target employee and his partner, claim Target’s COBRA notice process is deficient and fails to satisfy the law’s requirements by leaving out certain explanatory details.

Following the first plaintiff’s termination, Target sent a notice—the “COBRA Continuation Coverage Enrollment Notice”—in which it allegedly neglected to explain how to enroll in COBRA, and instead directed the man to a general “catch-all” human resources phone number operated by a third party. Further, the notice failed to both identify the plan administrator, the lawsuit continues, and include an address to which payments should be mailed. The plaintiffs say they were also not warned of how their COBRA coverage could be lost prematurely, which could occur as the result of, say, late payments.

The lawsuit then explains that Target sent the plaintiffs a second COBRA notice titled “Confirmation of Coverage – My Pay and Benefits” that contained “some – but not all” of the information missing from the previous notice.

“Rather than including all information required by law in a single notice ‘written in a manner calculated to be understood by the average plan participant,’ Defendant’s COBRA notification process instead offers only part of the legally required information but does so in piece-meal fashion,” the complaint states.

The plaintiffs claim they were damaged by Target’s allegedly deficient notices in that they were forced to pay out-of-pocket health expenses that would have otherwise been covered under COBRA insurance.