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Amazon settles lawsuit alleging COBRA notices were threatening



Dive Brief:

  • Services LLC agreed to a settlement Tuesday in a class-action lawsuit alleging the COBRA notices it sent to employees “discouraged individuals from electing continuation coverage” after a qualifying event. Terms of the settlement were not disclosed.
  • In the lawsuit, filed in the U.S. District Court for the Southern District of Florida, the plaintiff said her loss of health care coverage was “attributable to the chilling language” in the COBRA notice. “Specifically, it contains an ominous warning suggesting the submission of ‘incomplete’ information when electing COBRA may result in criminal or civil penalties,” court filings read.
  • The complaint alleged Amazon was in violation of the Employee Retirement Income Security Act, which Amazon contested, claiming that providing more information than necessary — information about potential legal ramifications — is not at odds with the law.

Dive Insight:

COBRA allows workers to continue to receive health benefits for a limited time after experiencing a qualifying event at their company, such as voluntary or involuntary job loss, reduction in the hours, job transition, death, divorce and other life events.

Employees must receive a COBRA notice within 14 days after the health insurance carrier is notified of the qualifying event, a compensation and benefits expert previously explained to HR Dive. Employees then have 60 days to opt in or out of continuation coverage. 

ERISA sets standards for most voluntarily created retirement and health plans in the private sector and is designed to protect plan beneficiaries.

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