Eleventh Circuit Adopts Elastic Standard for COBRA Improper-Notice Claim Accrual

P>Courts often hold that parties are presumed to know the law. And sometimes courts say otherwise. That's as much sense as I can make of the Eleventh Circuit's recent decision in Cummings v. Washington Mutual, Case No. 10-10706 (11th Cir, August 22, 2011).

In Cummings, the court addressed the issue of when the plaintiff's improper-notice claim under COBRA accrued. Under COBRA, an employer -- through its healthcare administrator -- must notify an employee of his right to continue his healthcare coverage after the termination of his employment. 29 U.S.C. §§ 1163(2), 1166. The employer must notify its healthcare administrator of the employee's termination within 30 days, § 1166(a)(2). The administrator then must notify the employee of his continuation right within 14 days, §§ 1166(a)(4)(A), (c). Cummings was terminated from his bank job on March 19, 2007. Thus, the employer had 44 days, i.e. until May 2, 2007, to notify Cummings of his continuation right: Cummings claimed that he never received a notification about his COBRA continuation right.

In Georgia, where Cummings was employed, a one-year limitations period applies to COBRA improper-notice claims. The issue in Cummings was when that one-year period began running. Cummings argued that his claim did not accrue until he learned from his lawyer on March 20, 2008 that his employer had failed to send him notification of his COBRA continuation right. The employer argued that the limitations period began to run on May 3, 2007, the day that the time for notifying Plaintiff expired. Cummings filed his lawsuit on July 24, 2008.

The Eleventh Circuit held that that a COBRA improper-notice claim accrues "when the plaintiff either knows or should know" that his former employer has failed to provide him with the required notice of his continuation right. This holding is not surprising. As the opinion in Cummings notes, the Eleventh Circuit has applied the "knew or should have known" standard in other contexts.

There was no allegation that Cummings actually knew on May 3, 2007 that his employer had failed to give him notice. So the question was, should Cummings have known on May 3, 2007?

The Eleventh Circuit said no, stating that:

The COBRA notification requirement exists because employees are not expected to know instinctively of their right to continue their healthcare coverage. To begin the statute of limitations when the notification period expires, as Defendant urges, would create the possibility...