Failing to provide adequate information on both its COBRA administrator and COBRA election procedures resulted in a class-action lawsuit against an employer. As part of a settlement agreement given preliminary approval by a federal district court in Florida, the employer will make “important changes” to its COBRA notice and set aside a settlement fund of $290,000 for the benefit of the settlement class. The case is Gilbert vs. SunTrust Banks, Inc., Case No: 9:15-80415-Civ-Brannon (S.D. Fla., Feb. 16, 2016).

Facts of the Case

Eric Gilbert and Laura Pinho filed a class action lawsuit against SunTrust Bank, alleging that it provided them and other class members with a COBRA notice that did not adequately inform them how to exercise their COBRA election rights.

They alleged the notice was deficient in two ways: (1) it did not provide the name and address of the COBRA administrator; and (2) it failed to adequately explain the plan’s procedures for electing COBRA coverage. Instead, they contended that the notice directed plan participants to a general human resources website and phone number.

After SunTrust’s attempt to get the case dismissed failed, the parties went through discovery, under which SunTrust provided information regarding the number of persons who received the COBRA notice at issue in the lawsuit, and also produced more 1,200 pages of documents, including exemplars of its COBRA notices, screen shots from itsmyHR website, relevant emails and other materials. Next, the parties engaged in court-ordered settlement discussions and reached a settlement with the following key terms:

Defining the class members: The settlement class was defined as all persons who were sent a COBRA notice from June 1, 2014, through Jan. 6, 2016, excluding any who opt out of the settlement. It was estimated that 9,000 persons fall within the settlement class.
Making changes to the COBRA notice: SunTrust agreed to the following “important changes” to the notice: (1) it specifically identifies myHR as the party responsible for administration of COBRA coverage; (2) it identifies the specific location on the myHRwebsite where information regarding COBRA coverage and a COBRA coverage election form can be found; and (3) it provides an alternate means to obtain an election form, and specifically provides that an election form will be mailed out to the notice recipient upon request.
Establishing monetary relief: SunTrust agreed to establish a common fund of $290,000, which will be used to compensate settlement class members and pay any amounts approved by the court for attorney’s fees, expenses and class representative service awards. The fund’s net proceeds will be distributed evenly among all settlement class members on a pro rata basis.    
Assessing attorney’s fees: The class counsel will seek an award of attorney’s fees of no more than $110,000, plus expenses. In addition, modest service awards of up to $5,000 may be sought for the named plaintiffs, subject to the court’s approval, to compensate them for their time and effort.

The plaintiffs then requested that the court enter an order preliminarily approving the settlement and certifying the proposed settlement class.

The court ruled that the proposed settlement more than satisfied the standard for preliminary approval. Generally, the court noted that by settling, the parties avoid the risks and expense of protracted litigation. The court added that the standards for class certification were met. For example, common questions were identified that predominated over any individualized issues. Namely, the central issues revolved around a standardized COBRA notice that was common to all class members, whether that notice was lawful and whether SunTrust should be required to pay statutory penalties for using that notice.

The court further noted that the settlement provides substantial relief to the class members. The $290,000 in the settlement fund represents a gross recovery of approximately $32.22 per class member ($290,000 / 9,000 = $32.22), which the court indicated is approximately 30 percent of the maximum $110-per-day statutory penalty for COBRA notice violations. Furthermore, the settlement provides significant prospective relief, according to the court, because SunTrust agreed to make changes to address the alleged notice deficiencies.


As this case shows, deficient COBRA notices may expose an employer/plan administrator to legal action and statutory penalties. In this case, the employer avoided the latter by settling the case, but still must put a significant amount of money into a settlement fund. Considering the potential class was deemed to be 9,000 individuals, settling was likely considered the wisest move to minimize legal exposure.

This case serves as a reminder that COBRA notice regulations from the U.S. Department of Labor establish a list of 15 content requirements for COBRA notices — to include what was allegedly lacking in SunTrust’s notices: the name, address and telephone number of the party responsible under the plan for COBRA administration; and an explanation of the plan’s COBRA electing procedures, including when the election must be made. Note, however, that DOL’s model election notice, updated in May 2014, provides less detail than the requirements specified in the 2004 final regulations.