Michael Savino was an electrician who received health coverage through the “Joint Industry Board of the Electrical Industry” (Joint Board), which is a board made up of representatives from electrical employers and the union Savino was a member of. Savino was injured on the job and received free family health coverage while he collected workers’ compensation benefits from May 2017 to May 2019.
After those two years, his health coverage was scheduled to end. The Joint Board sent Savino a COBRA notice explaining his free family coverage would end and that if he did not elect and pay for COBRA continuation coverage, his coverage would end. The Joint Board sent the COBRA notice by first-class mail to Savino’s home address. Savino denied receiving the March 2019 COBRA notice. The Joint Board decided to extend his free family coverage to February 2020. Thereafter, the Joint Board sent him another COBRA notice in February 2020. Savino also denied receiving the February 2020 COBRA notice.
Savino did not elect COBRA and claims he only found out that he had lost his health coverage after receiving medical bills. He asked the Joint Board to reinstate his free family coverage. The Joint Board, instead, sent him an additional COBRA notice. Savino then filed a lawsuit against the Joint Board with a claim that the Joint Board had failed to provide COBRA notice.
COBRA requires employers and plan administrators to use “measures reasonably calculated to ensure actual receipt” of the COBRA notice by the qualified beneficiaries. (29 C.F.R. section 2520.104b-1(b)(1).) Under this standard, proof of the actual notice to the former employee is not required. An employer merely has to use methods reasonably calculated to ensure actual receipt of the notice.
Upon a showing of prejudice or bad faith, a plaintiff may be entitled to a penalty when they do not receive a COBRA notice. The Court noted that it is well settled that “[w]hen an employer mails a COBRA notice to the covered employee’s last known address, the notice is reasonably calculated and the employer is ‘deemed to be in good faith compliance with COBRA’s notification requirements.’”
Savino argued that the Joint Board did not actually mail a COBRA notice to his home address, or that the Joint Board did not follow its standard mailing procedure since he did not receive the COBRA notice. However when asked whether he had any knowledge that the COBRA notice was not sent to him, Savino testified that he had, “[n]o knowledge that it wasn’t sent to me.” The Court assessed that bare denials could not defeat the Joint Board’s motion for summary judgment.
However, the Court also found information missing from the Joint Board’s evidence. Even though the Joint Board was able to provide copies of the COBRA notices it prepared for Savino, there was no sworn statement by an individual with personal knowledge that the COBRA notices were, in fact, sent. In many cases, courts will look for “something more than a declaration from an individual removed from the actual notice-mailing process.” Yet, the Court still ruled in favor of the Joint Board.
The Court found Savino failed to raise any issue of fact about the Joint Board’s bad faith or prejudice to him. Savino conceded he had no reason to believe the Joint Board failed to send the COBRA notices on purpose, and the Court found there was no prejudice to Saviano because his COBRA premium payments would have exceeded the medical bills he incurred during the period of coverage in dispute. Therefore, the Court did not award statutory penalties for failure to provide COBRA notice. The tax penalty for not sending out a COBRA notice would have been $100 per day per person or $200 per day per family. (26 U.S.C. § 4980B(b)(1), (2)(B)(i)-(ii).)
Savino v. Joint Indus. Bd. of the Elec. Indus. (E.D.N.Y. Jan. 13, 2025, No. 22-cv-682 (CBA) (PK)) 2025 U.S.Dist.LEXIS 7201.
Note: Many health plan administrators send out COBRA notices to qualifying employees. For example, CalPERS sends out COBRA notices to individuals who lose coverage under a CalPERS health plan. Therefore, if an employer does not timely send out a COBRA notice, it should check whether its health plan administrator sent out a COBRA notice to meet the notice requirements.