Archive for September, 2011

What to Look for in an Administrator

If you are looking for ways to enhance COBRA Administration, consider COBRA Eligibility Management. This type of service relieves employers of one less responsibility, allowing more time to focus on more strategic issues.

COBRA Eligibility Management does much more than save time, it reduces Qualified Beneficiary complaints and reduces exposure to claims…. Something every HR department aspires to achieve.

There are several management tasks to look for in a COBRA Eligibility Management administrator:

– Manage multiple carriers and plan changes

– Obtain online access to carriers to enter COBRA new continuees and terminations

– Faster online eligibility changes

– Faster reinstatements for your employees and COBRA terminations

– Online access for Qualified Beneficiaries to view status

– Work with your carriers to resolve any errors

Most importantly, make sure your COBRA Eligibility Management administrator has an excellent track record in customer support and adherence to compliance.

To learn more about how you can help free your HR department from these time-consuming tasks, and free them up to hire the best talent for your company, contact us today!

“Gross Misconduct” Termination and COBRA Coverage

According to COBRA coverage rules, if an employee is terminated from employment due to “gross misconduct” then the employer has the right to deny COBRA coverage for the employee and his or her family. The definition of “gross misconduct” in the COBRA context, however, must be carefully considered – it must be sufficiently severe conduct and there has to be a connection or “nexus” between the conduct and the employer’s workplace.

In a recent case, Shrimpton v. Quest Diagnostics Inc., 2011 WI 2648117 (N.D. Ohio, Jul1, 2011), a former employee’s sex offense conviction, which led to his termination of employment, was ruled not enough to deny COBRA coverage due to a gross misconduct rule. In this case, Brian Shrimpton was an employee of Quest Diagnostics Inc., and both he and his wife were covered under the company’s group health plan. On Aug. 1, 2009 Shrimpton was terminated from his job after the company learned he had been convicted of two counts of pandering sexual material involving a minor and one count of possession of criminal tools, which were both felonies in Ohio. As a result, Shrimpton was categorized as a “Tier II” sex offender and sentenced to 5 years in prison. At the time of his termination Shrimpton claimed a Human Resource manager told him he and his wife would be receiving COBRA paperwork in the mail; however, it never arrived and soon they found their benefits were cancelled when his wife went to fill a prescription. Shrimpton argued that as a result of these errors and omissions on the part of his employer, his wife incurred uncovered medical expenses.

Quest Diagnostics countered with the fact that because Shrimpton was fired for gross misconduct, they had no obligation to offer COBRA coverage or send a COBRA notice to his wife. However, the company did admit they did not explain to his wife that “gross misconduct” was the reason for his termination until after he sued the company for COBRA notice violations. After Shrimpton’s attorney sent Quest Diagnostics a letter alleging it had violated COBRA notification rules when it failed to send his wife a COBRA election notice, the company promptly sent her the election notice and forms. On Dec 9, 2009 she submitted her premium payment and gained coverage under the group health plan. However, Quest Diagnostics later claimed that employees who were not familiar with the details of Shrimpton’s termination sent the COBRA paperwork in error. Shrimpton contended that Quest Diagnostics waived its gross misconduct defense by its actions of appearing to offer COBRA coverage for his wife. Ultimately a federal judge held that Shrimpton’s conviction as a sex offender was not enough to deny COBRA coverage due to gross misconduct because it could not be proven that the conduct had a “substantial nexus” to the workplace. Additionally, Shrimpton did not succeed in proving that the employer waived its right to use the gross misconduct defense by sending COBRA election forms to his wife.

In this case the court noted that the meaning of “gross misconduct” is not clearly defined in either COBRA statute or case law. In facing the “gross conduct” challenge courts have generally used a two-part litmus test:

  1. The conduct is intentional, wanton, willful, deliberate, or reckless, or performed with deliberate indifference to an employer’s interests.
  2. The conduct has a “substantial nexus” to the workplace. A substantial nexus has been found to exist when the conduct in question directly involved the employer itself, a fellow employee or a current or former client.

The following are case law examples of gross misconduct that have passed the “substantial nexus” test:

  • An assistant professor pleaded guilty to student aid fraud, bank fraud and Social Security fraud, and lied on his employment application about having an undergraduate degree.
  • A fight attendant made a racial remark toward a co-worker and threw an apple at her while aboard their airplane.
  • An employee repeatedly and persistently refused to follow his supervisor’s instructions.
  • An employee drank a substantial amount of alcohol at a business meeting, becoming intoxicated and thereafter caused a car accident while driving a company car.
  • An employee stole store coupons from her employer and redeemed them to obtain free turkeys from her employer.
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