Over the past several years, there has been a noticeable increase in litigation surrounding the implementation of the Consolidated Omnibus Budget Reconciliation Act of 1985, better known as COBRA. Since 2016, plaintiffs’ attorneys have filed more than 70 putative class actions, primarily aimed at considerable plan sponsors, due to alleged inadequacies in the election notice requirements, as per the obligations under COBRA. This wave of litigation has potential far-reaching implications, especially considering the potentially large classes composed of thousands of prospective members who can be represented in these lawsuits.
As well as this, attention has been drawn to the potential financial implications of these lawsuits. Specifically, plaintiffs’ counsel consistently seek statutory penalties, which can reach as high as $110 per violation. These penalties are discretionary but can rapidly accumulate given the sheer volume of alleged violations within each class.
Recent legal proceedings related to this matter, however, seem to illustrate some level of skepticism on the part of the courts towards these plaintiffs’ claims. Such court decisions are increasingly being watched by legal professionals across the globe, particularly those operating within large corporations and law firms.
Staying abreast of these trends is critical for legal professionals, not only to navigate the complexities of these class actions but also to inform future COBRA compliance efforts, so that companies can best mitigate exposure to legal liabilities related to COBRA notice requirements. Close attention to this quickly evolving landscape is strongly recommended to all involved in this field.