Employee Benefits-The Fifth Circuit Rules That A Former Employee, Who Elected COBRA, Is Entitled To Be Sent Notice That The Employer Is Discontinuing Its Health Plan

In Hager v. DBG Partners, Inc., No. 17-11147 (5th Cir. 2018), after plaintiff David Hager (“Hager”) was fired by defendant, DBG Partners, Inc (“DBG”), he obtained continuation coverage under DBG’s ERISA health care plan through COBRA.  Hager later filed this suit, alleging that DBG had discontinued its health plan without notifying him, violating COBRA’s notice requirements.  The district court dismissed Hager’s claim on the eve of trial, concluding that ERISA did not provide Hager with a remedy.  Hager appeals.

Upon reviewing the case, the Fifth Circuit Court of Appeals (the “Court”) reversed the district court’s decision.  COBRA has a notice provision, in  29 U.S.C.S. § 1166(a)(4), which applies to former employees receiving COBRA benefits.  DBG discontinued its health plan earlier than 18 months after Hager was fired.  It therefore had an obligation-under the COBRA notice provision- to notify Hager “as soon as practicable” that it was discontinuing coverage.  Hager adequately alleged that DBG did not fulfill its notice obligations under COBRA.  Hagar could be entitled to the penalty award under 29 U.S.C.S. § 1132(c)(1) because of DBG’s failure to provide the notice.