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A Service of OnQue Technologies, Inc. |
Who Pays Damages When COBRA Is Improperly Denied?
Employer, TPA and carrier may all be held accountable. |
April 10, 2003
Santa Rosa, CA |
Once again, the real world reminds us of the importance of following
fundamental procedures when administering COBRA continuation
coverage. In the recent case of Fink v. Dakotacare, an employer,
its third party administrator (TPA), and the group plan's carrier
all ended up in appeals court, defending themselves against charges
of improperly denying COBRA benefits to a qualified beneficiary.
We'll analyze this lawsuit for you because we think it points up
some of the common risks employers take when they abdicate total
control of COBRA administration to outside entities.
But first, a reminder of the basic practices that go a long way
toward protecting you from liability for COBRA errors, even if a
third party administers COBRA:
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Have in place a written COBRA procedures manual tailored
specifically for your company and follow it. Boilerplate
manuals often don't cut it. Even when COBRA administration is
being handled by a third party, procedures must be in place
for proper communications between the employer and its TPA.
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Retain copies of all documents: notifications, letters,
payments, and notes relating to oral communications.
If a third party is responsible for COBRA administration,
it is still necessary for the employer to maintain all records,
including communications between the employer and the TPA.
Accurate recordkeeping is invaluable if you are faced with a
lawsuit or IRS audit.
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Always communicate clearly with qualified beneficiaries, so
they understand their rights and obligations - particularly
when you change carriers or billing procedures. When errors
occur due to inadequate or faulty communication practices,
chances are it will be the employer who pays for those errors.
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Stay informed and involved at all stages of COBRA administration.
TPAs and carriers are agents of the employer, so the employer
almost always retains liability for COBRA errors. Even when third
parties claim to shoulder all the responsibilities of COBRA
administration, you may still be liable for damages and penalties
if violations occur.
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The Case: Fink v. Dakotacare
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To learn how the implementation of these simple practices might
have avoided an expensive lawsuit, see
Fink v. Dakotacare: Who Pays Damages When COBRA Is Improperly Denied?
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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Copyright © 2003 OnQue Technologies, Inc. All Rights Reserved.
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