Former Employee Files COBRA Lawsuit Against Hershey

The Hershey Company was hit with a class action lawsuit this month over claims it failed to comply with federal regulations in notifying a former employee about her right to continue participating in the company’s health care plan.

A Tennessee woman filed the complaint against her former employer on June 18 in U.S. District Court for the Western District of Tennessee. In her COBRA lawsuit, she alleges Hershey left key pieces of information out of its notifications and that caused her to lose out on the opportunity to maintain her health insurance under the federal Consolidated Omnibus Budget Reconciliation Act, or COBRA.

She is suing the company and seeking to have her COBRA health insurance lawsuit certified as a class action because she believes many other former employees received similar paperwork.

How COBRA Works

Companies with 20 or more full-time workers are required by law to offer health insurance to eligible employees and cover some of the cost. When an employee loses eligibility, the company can stop subsidizing the insurance premiums.

Thanks to COBRA, the worker can continue to be covered by the former employer’s plan though, for up to 18 months, if he or she makes the payments. Any of the worker’s dependents also enrolled in the insurance plan can also continue coverage, for up to 36 months.

The U.S. Department of Labor regulates COBRA notification requirements. COBRA insurance rules can be confusing and the notifications can be complicated for affected employees to understand, so the department created a “model” notice that employers can copy and customize.

Hershey’s COBRA Lawsuit

The plaintiff alleged she had worked for the Hershey Company for four years and was enrolled in the company’s health insurance plan at the time she was terminated in October 2018, according to her COBRA lawsuit. Her dependents were also covered by the Hershey group plan.

Shortly after the termination, the plaintiff got a COBRA notification, she said, but the paperwork did not give a date on which the coverage would eventually end if she chose to use it. The notification was also missing an explanation of how participants can lose COBRA coverage if they become eligible under another group health plan or fail to make payments, according to the lawsuit. The notice also did not identify or provide contact information for the plan administrator.

The plaintiff claims Hershey’s standard practice regarding the COBRA notification was to send two notices to eligible employees. The first was the one the plaintiff received. The second, she says, would only be sent if the employee acted on the first and elected the COBRA coverage, and that notice would have the information the first was lacking.

The lawsuit claims that practice was meant “to discourage participants from enrolling in continuation coverage.”

Because the notice she received was missing key information and therefore unclear to her, the plaintiff was unable “to make an informed decision,” her complaint says, so she did not elect the COBRA option. As a result, she later incurred medical bills and had to pay them out of pocket before getting new insurance.

The Latest in a Series of COBRA Lawsuits

The Hershey COBRA lawsuit is at least the fifth class action brought against big U.S. companies over claims of improper notifications. Days before it was filed, a former employee of Southwest Airlines filed a similar claim in Florida. Before that, cases were filed again Starbucks, Citigroup, and PepsiCo., among others.

The Society for Human Resource Management reported to its members in March that more than ten “household-name entities” have been sued in cases involving companies that did not use the Labor Department’s model notice.

The Hershey Company Class Action Lawsuit is Case No. 2:20-cv-02433-MSN-cgc, in the U.S. District Court for the Western District of Tennessee, Civil Division.

Join a Free COBRA Class Action Lawsuit Investigation

If you received a COBRA notice that did not fully disclose your rights and how to retain your health insurance following separation from your job, or you received no notice at all, you may be qualify to join this COBRA notice class action lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.