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Ryder Noncompliant COBRA Notice Class Action

When employees leave a larger company that provided them with health insurance, they have the choice of continuing that insurance coverage for a limited period of time. This is permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The complaint for this class action alleges that, in order to save money, Ryder System, Inc. does not give departing employees proper notice so that they can choose to keep their coverage.

The class for this action is all participants and beneficiaries in Ryder’s health plan who were sent a COBRA notice by Ryder, in the form sent to the plaintiff in this case, during the applicable statute of limitations period, as a result of a qualifying event, as determined by Ryder’s records, who did not elect to continue coverage.

COBRA attempts to help people maintain their health insurance coverage a little longer when they leave their employers in a “qualifying event.” Under the law, companies must provide departing employees with proper notice about this, with enough information to help them to choose to continue coverage if they want to do so.

To make this easier, the Department of Labor has published a Model COBRA form. However, according to the complaint, Ryder has chosen not to use this form and instead has put out a notice of its own, which the complaint alleges does not comply with the law.

Why would a company choose not to give a departing employee proper information? The complaint alleges that COBRA claims are expensive for companies.

It quotes a Congressional research service study on COBRA as saying, “…[The] average claim costs for COBRA beneficiaries exceeded the average claim for an active employee by 53%. The average annual health insurance cost per active employee was $7,190, and the COBRA cost was $10,988.14. The Spencer & Associates analysts contend that this indicates that the COBRA population is sicker than active-covered employees and that the 2% administrative fee allowed in the law is insufficient to offset the difference in actual claims costs.”

According to the complaint, the employer must provide all information required by law in a single notice and must be “written in a manner calculated to be understood by the average plan participant[.]”

Instead, the complaint alleges, “Ryder instead opted to break the information into multiple documents, mailed separately under different cover, containing bits and pieces of information on COBRA, both of which are still missing critical information.”

For example, the complaint alleges that Ryder’s notice violates the law “because the COBRA Enrollment Notice itself never actually explains how to enroll in COBRA, nor does it bother including a physical election form… Instead, it merely directs plan participants to a ‘catch-all’ general H.R. phone number to enroll in COBRA, operated by a third[ ]party guised as the Ryder benefits department, rather than explaining how to actually enroll in COBRA.”

Also, the deadline shown on the notice is not accurate, the complaint asserts, because the government has extended COBRA enrollment deadlines.

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Ryder Noncompliant COBRA Notice Complaint

February 24, 2022

When employees leave a larger company that provided them with health insurance, they have the choice of continuing that insurance coverage for a limited period of time. This is permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The complaint for this class action alleges that, in order to save money, Ryder System, Inc. does not give departing employees proper notice so that they can choose to keep their coverage.

Ryder Noncompliant COBRA Notice Complaint

Case Event History

Ryder Noncompliant COBRA Notice Complaint

February 24, 2022

When employees leave a larger company that provided them with health insurance, they have the choice of continuing that insurance coverage for a limited period of time. This is permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The complaint for this class action alleges that, in order to save money, Ryder System, Inc. does not give departing employees proper notice so that they can choose to keep their coverage.

Ryder Noncompliant COBRA Notice Complaint
Tags: ERISA Violations, Employment Violations, Health Insurance, Improper COBRA Notice