Amazon settles COBRA notice lawsuit a week before trial

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Update:

• Amazon reached a settlement with plaintiff Teresa Lites in a class action lawsuit claiming the company sent out improper notices to continue health care through the Consolidated Omnibus Budget Reconciliation Act (COBRA) program.
• The settlement terms were not disclosed, but Lites’ counsel writes in the notice of settlement that there is a “settlement in principle and [we] are in the process of memorializing the finer terms of settlement in a written document.”
• Lites claimed Amazon’s COBRA notices were threatening and added language that said health care coverage would be discontinued if forms were filled out incorrectly.
• Amazon said it included the additional language to help deter fraud, not to intimidate former employees into not taking the COBRA insurance option as Lites had claimed.

Amazon COBRA overview: 

• Who: A former Amazon employee sued the tech giant.
• Why: The plaintiff says the company sent threatening letters to former employees that intimidated them so they didn’t sign up for extended healthcare coverage. 
• Where: The Amazon COBRA class action lawsuit was filed in a Florida federal court.

(Aug. 1, 2022)

Amazon sent its former workers threatening letters intended to intimidate them so they would not sign up for continued healthcare coverage they were legally entitled to after their employment ended at the company, a new class action lawsuit alleges.

Plaintiff Teresa Lites filed a motion for class action certification Oct. 27 in a Florida federal court after accusing Amazon.com Services Inc of violations of the Consolidated Omnibus Budget Reconciliation Act (COBRA). 

According to Lites, there are about 677,000 members of the class who received deterrent letters after their employment at Amazon ended.

Under COBRA, group health plans sponsored by employers with 20 or more workers should offer employees the opportunity for a temporary extension of health coverage in certain instances where coverage under the plan would otherwise end so that healthcare does not end abruptly.

However, in Amazon’s case, since Feb. 25, 2018, only 2.2% of the people receiving Amazon’s COBRA notice elected to continue their coverage, Lites says.

Amazon COBRA class action claims company sends purposefully confusing letters

Amazon purposefully sends renewal letters that are intentionally confusing and threatening, the Amazon COBRA lawsuit alleges.

In her original complaint, Lites says that after she was terminated while on medical leave in 2019, she received a COBRA notice from Amazon that contained “inaccurate and misleading threats” about civil and criminal penalties she could face if she filled out the form incorrectly.

“Plaintiff found the COBRA notice to be long and confusing,” the class action states. “Plaintiff did not elect COBRA because she was unwilling to certify to something she didn’t understand and did not wish to be held liable for making a mistake on her application.”

As a result, Lites and her five children lost health, dental and vision coverage, the Amazon COBRA class action states. Without health insurance, she did not get follow-up care for pre-existing injuries or have her annual gynecological exam. There were also instances in which Lites did not seek medical care for her children when they became ill, as she could not afford it, the lawsuit states.

Lites looks  to represent 676,728 participants and beneficiaries of Amazon’s health, dental or vision plans who received the allegedly deficient COBRA notices since 2018 and as a result did not elect to take COBRA continuation coverage.

She’s seeking damages, fees, costs and a jury trial. 

In other Amazon news, a consumer hit the company with a class action lawsuit earlier this year, alleging the company systematically fails to provide mandated accommodations for postpartum female employees who have returned to work but must still pump.

What do you think of the claims against Amazon? Let us know in the comments. 

Lites is represented by Marc R. Edelman of Morgan & Morgan PA.

The Amazon COBRA class action lawsuit is Lites, et al. v. Amazon.com Services Inc., Case No. 1:22-CV-20587, in the U.S. District Court for the Southern District of Florida.

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