With increasing frequency, when employees sue their employer or former employer, they also name individual managers or the company’s owners as defendants in their suit. Under federal EEO laws (e.g. Title VII, ADA, ADEA), individuals generally cannot be held liable for acts of discrimination. However, employment laws such as the FMLA, FLSA and the Pennsylvania Human Relations Act do allow for individual liability under some circumstances. In Abdellmassih v. Mitra OSR (February 28, 2018), the U.S. District Court for the Eastern District of Pennsylvania addressed whether individuals may be held liable under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for failing to issue required COBRA notices.
Mr. Abdellmassih was terminated from his position at a KFC restaurant and sued his employer under a variety of laws. He named the co-owners of the company as individual defendants with respect to his claims under several laws, including COBRA. The basis for his COBRA claim was that he was allegedly never issued a COBRA notice after he lost his health coverage due to the termination of his employment.
COBRA provides that a plan administrator who fails to comply with COBRA’s notice requirements may, at a court’s discretion, be held personally liable for up to $100 per day that the required notice is not provided. Mr. Abdelmassih argued that his former employer’s co-owners served as the health plan’s administrators and, therefore, should be individually liable for the plan’s failure to issue required COBRA notices. However, upon reviewing the company’s health insurance brochure, the court noted that the owners were not named anywhere in the document – as plan administrators or otherwise. Indeed, the brochure merely directed employees to contact a human resources representative if they had questions regarding their COBRA rights. Since the co-owners were not named in the document, the court found there was no basis to impose individual liability upon them under COBRA. However, Mr. Abdelmassih’s COBRA claim against the corporate entity remained intact.
The lesson of the Abdelmassih case is simple. When identifying the “plan administrator” in a plan document or summary plan description, avoid naming individuals. A general reference to the employer (or third party administrator firm) – or the department with responsibility for plan administration (e.g. human resources) – is the best way to avoid individual liability situations under COBRA. A quick check of your company’s plan language on this point may save you (or someone in your company) from significant liability!