COBRA Lawsuits In the Retail Industry: A Cautionary Tale

One of CobraHelp’s fundamental components as a third-party COBRA administrator is to constantly guide and educate our target client base on the importance of proper COBRA compliance. 

Considering COBRA is primarily how our business makes its money, however, our efforts to communicate the serious risk of noncompliance could potentially come across as “salesy.” Even when we highlight the very real financial dangers a company could be faced with, the truth is, a lot of employers view COBRA penalties or lawsuits the same way they might view a tragic news story, “Well, that would never happen to us.” Until, of course, it does.  Just ask the US based retail giant Target Corporation. 

​The eighth largest retailer in the United States is currently stuck in a legal battle over a class action lawsuit that was filed in Florida in which the plaintiffs, a former Target employee and his partner, claim the retailer failed to provide legally adequate notice and instructions regarding their right to continued health coverage under COBRA. According to the lawsuit filed on June 13th, 2019, the plaintiffs claim that Target’s COBRA Notice process is deficient and fails to satisfy the law’s requirements by leaving out certain explanatory details. More specifically, the class action lawsuit alleges that Target Corporation’s COBRA Notice neglected to explain how to enroll in COBRA, failed to identify the plan administrator and address in which payments should be sent to, and there was no explanation of how COBRA coverage could be terminated - such as sending in payment late, for example. The plaintiffs are seeking damages as they claim they were forced to pay out-of-pocket medical expenses that would have otherwise been covered under COBRA insurance, had they been properly notified of their COBRA rights and the precise procedures on how to elect and maintain continued health insurance under the Consolidated Omnibus Budget Reconciliation Act. 

​Rest assured Target’s current COBRA litigation battle is not a one-off anomaly. In fact, it is not even an irregularity within their own industry. Earlier this year a U.S. District attorney ruled that one of Target’s biggest competitors, which also happens to be the world’s largest company by revenue, will also need to face a similar COBRA related class action lawsuit. The company on the hot seat, if you haven’t already guessed it, is none other then the global retail goliath, Walmart. In April of this year, the US District Judge dismissed Walmart’s argument against the COBRA Notice class action lawsuit, Jamie Bryant v. Wal-Mart Stores Inc., Case No. 1:16-cv-24818, which was also filed in Florida, claiming that the retail chain did not sufficiently inform workers of their COBRA health benefits. For context, the original lawsuit filed against Walmart that alleges the company’s COBRA notice was confusing, not easily understandable, and did not include information on how to contact the health care plan’s administrator, was filed in April of 2016. For those of you keeping score at home, that means that the legal battle on whether this class action lawsuit will be tried in the court of law has already extended the span of three years. That’s an enormous amount of time, resources, and energy that Walmart had to commit to this case. One could argue that considering the retailer pulled in US$514.405 billion of revenue this year, they can afford such legal battles, but then again, very few companies, if any, have the kind of disposable resources that Walmart has. 

​The moral of the story is that no US company, regardless of size, notoriety, or resources is immune to the potential risks of COBRA non compliance.  Thus, adhering to the to COBRA guidelines and ensuring that all notices fit the standards of the law, should absolutely be taking seriously by any company subject to COBRA. Because if they are not, the consequences could be catastrophic. 
To avoid being in the instance Target currently is in, contact MyCOBRAHelp today. Our experts can help get your COBRA items setup properly so you don't have to worry.