PepsiCo Lawsuit Alleging Failure to Provider Proper COBRA Forms Will Move Forward

PepsiCo Inc. must face a proposed class action lawsuit filed by a former employee who said he lost health insurance coverage after the company failed to provide him with complete COBRA forms, ruled a New York federal judge last month.

PepsiCo tried to get the case dismissed, but U.S. District Judge Vincent L. Briccetti ordered the lawsuit move forward.

The lead plaintiffs, a married couple, filed the lawsuit after the husband lost his job, and they subsequently lost the health insurance coverage PepsiCo had provided them. They allege the COBRA health insurance notices they received did not meet the requirements of the Employee Retirement Income Security Act (ERISA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA), both of which are federal laws that regulate the notification process.

In general, COBRA requires employers with 20 or more employers in the prior 12 months to temporarily extend health insurance coverage under certain circumstances that would otherwise find the employee without continued coverage.

The couple’s lawsuit alleges they incurred medical bills as a result of losing their health insurance coverage.

“Although this is a close call, after reviewing the notices, the model election notice promulgated by the DOL, and the allegations in the second amended complaint (which the court must accept as true), the court finds the Riddles have set forth sufficient factual allegations to state a claim for relief,” Judge Briccetti said in his ruling to allow the case to move forward.

Alleged Problems with PepsiCo’s COBRA Forms

PepsiCo allegedly violated the law by sending more than one notice, all of which allegedly failed to comply with COBRA’s election notice requirements. The notices purportedly fell short of meeting the law’s requirements and did not follow a model form provided by the U.S. Department of Labor.

The judge also said a Florida federal court made a decision that employers were required to provide the COBRA administrator’s contact information. PepsiCo, which used a third-party provider, purportedly failed to identify a way to contact the administrator.

PepsiCo also allegedly failed to include physical COBRA forms necessary for the former employee to complete in order to elect to continue health insurance coverage.

The case started in January 2019 in Florida state court, but was removed to federal court and eventually transferred to New York. The Riddles amended the complaint by adding allegations that PepsiCo tried to convince former employees to use the health insurance marketplace instead of COBRA.

Lockheed Martin Corporation settled a similar COBRA lawsuit for $1.2 million in September. The company allegedly failed to provide proper COBRA notices to Angela Hicks, who filed suit after her husband was let go from the company. She alleged the plan administrator was not identified and that she was not even provided with an address to mail in her COBRA payments.

Hicks requested Lockheed send complete COBRA notices to the members of the proposed class and pay the statutory penalties of $110 per plan participant and beneficiary for each day the company was not compliant with federal laws. According to the settlement paperwork, Lockheed agreed to the settlement terms “solely to purchase peace and in recognition of the substantial burden of continued litigation.”

The PepsiCo COBRA Forms Class Action Lawsuit is Case No. 7:19-cv-03634, in the U.S. District Court for the Southern District of New York.

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.