• Carolyn C. Phillips, et al., v. Wythe County Community Hospital, et al. Case No. 7:08CV10016, (W.D. Va. Dec. 22, 2008)
  • December 13, 2009 | Authors: Arthur N. Lerner; Bruce O. Tavel
  • Law Firm: Crowell & Moring LLP - Washington Office
  • On December 22, 2008, the United States District Court for the Western District of Virginia held that retired hospital workers were entitled to notice under COBRA even when they were receiving retiree coverage. Plaintiffs accepted an early retirement package that provided group health coverage until age 65. When their former employer sold its assets, their health plan also ended. Although the successor entity agreed to purchase a new health plan, plaintiffs were without coverage for a two-month gap period. They sued the hospital and its successor entity in federal court, alleging that Defendants failed to provide them notice of their COBRA benefits and violated ERISA’s disclosure and reporting requirements. Defendants filed a motion to dismiss for failure to state a claim.

    Defendants challenged Plaintiffs’ claims for statutory penalties on statute of limitations grounds. Since neither ERISA nor the COBRA amendments contained an express statute of limitations applicable to Plaintiffs’ claims, the Court applied the two year “catch-all” statute of limitations. Plaintiffs’ potential benefits under COBRA differed from the coverage they received as retirees. As such, they were entitled to notice of their rights under COBRA upon retiring despite already receiving benefits under the retirement package. Plaintiffs’ termination of employment was a “qualifying event” that triggered the requirement to provide notice of COBRA benefits.

    Although Plaintiffs’ ERISA claims were time barred, the Court could not determine when the statute of limitations began to run for the COBRA claims. Plaintiffs alleged that “they did not know all of the relevant facts entitling them to COBRA continuation coverage upon retirement.” The Court held the pleadings alone were insufficient to determine whether Plaintiffs knew or should have known that their retiree benefits differed from those available under COBRA.