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► Court Rules COBRA Election Notice Was Properly Given By Mail

Plan administrators should establish procedures to accumulate and update address information for all covered employees and beneficiaries (including qualified beneficiaries and potential qualified beneficiaries). These procedures need to be communicated to all participants and followed by plan administrators. Clear and consistently applied and followed procedures are key to good administration under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

A qualified beneficiary attempted to argue that an employer/plan administrator violated COBRA’s notice rules and acted in bad faith by sending his election notice to the “wrong address” (apparently, he had at least two mailing addresses).

However, a federal district court in Illinois noted that the employer’s usual and customary procedures were used to send the notice to the last known address on file in his health insurance documents—which he never updated—and the notice was not returned to sender.

Accordingly, the court found that the employer properly complied with COBRA’s notice requirements and dismissed the lawsuit. The case is Friedman v. Dynamic Healthcare, Inc., 2020 U.S. Dist. LEXIS 22378 (N.D. Ill., February 5, 2020).

Facts of the Case

Benjamin Friedman was terminated from Dynamic Healthcare, Inc., on February 12, 2018. He was covered under Dynamic’s group health plan, which was insured by Blue Cross Blue Shield (BCBS). When Friedman first enrolled, he listed his address as 3711 W. North Shore Avenue in Lincolnwood, Illinois.

Accordingly, all health insurance-related documents were sent to that address. His property taxes also listed that as his address; however, his address in Dynamic’s employment files was, at some point, 3336 W. North Shore Avenue.

Dynamic used Asure Software, Inc., to administer its COBRA continuation coverage program. Employee profiles in the software system included the address they provided to BCBS. On February 22, 2018, Dynamic mailed a COBRA election notice to Friedman using its “usual and customary procedures” as follows: (1) terminating Friedman’s account with BCBS through Dynamic’s BCBS online portal; (2) printing the confirmation of termination; (3) logging into the Asure software; and (4) comparing the address Friedman provided to BCBS with the address reflected in the Asure software profile. The addresses were the same, so the notice was mailed to the 3711 W. North Shore Avenue address. It was not returned to sender.

In April 2018, Friedman sued Dynamic for failing to provide a COBRA election notice. Dynamic noted it had already sent the notice but would send it again to Friedman’s legal counsel, who received it via e-mail on April 17, 2018. Friedman subsequently elected COBRA coverage.

However, he alleged in his lawsuit that Dynamic’s CEO was “bitter toward him as a result of their business engagements,” which provided a motive for him to intentionally and in bad faith send Friedman’s notice to the wrong address and ignore his notice requests. Friedman also argued bad faith was evidenced because the CEO had been to the “3336” residence in the past.

Dynamic countered that: (1) Friedman was given the option to update his address for health insurance-related matters either online or with the benefits staff directly but never did; and (2) a separate process exists for updating payroll addresses versus health insurance correspondence, and sometimes, people provided differing addresses for the two types of correspondence.

The court noted it is settled law that it recognizes that a “good faith” attempt to send notice to a qualified beneficiary satisfies an employer’s COBRA obligations.

The evidence clearly showed that Dynamic acted in good faith as a matter of law, according to the court: He provided the 3711 address in his application; his health insurance documents were sent there; Dynamic’s usual and customary procedures were used to send his COBRA notice to that address, which he never updated; and that notice was not returned to sender.

In addition, Friedman continued to own the 3711 residence, and his mother was living there at least until his lawsuit was filed. The court rejected Friedman’s argument that the CEO had visited his other residence, noting that no evidence existed that the CEO knew that Friedman could not, or would not, also receive mail at his 3711 residence.

The court further noted good faith does not require measures such as acting on knowledge of the other address by actively reaching out to Friedman or instructing the benefits staff to change Friedman’s address in the health insurance system without Friedman’s permission.

Accordingly, the court ruled in Dynamic’s favor.


Proper COBRA administration depends on the adequacy of notice procedures. As part of a good COBRA administration system, there should be some coordination of address data for qualified beneficiaries and potential qualified beneficiaries.

Sometimes, there is a disconnect between HR payroll and other information systems with group health plan data systems. When there is not, though, and plan administrators can demonstrate that notices were sent to the last known address in the COBRA administration system, courts will tend to find that COBRA rules were followed.

By Gwen Cofield, Contributing Editor. Ms. Cofield is an editorial/communications professional with more than 20 years of experience in the for-profit, non-profit and government sector.


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