COBRA-Employer Problem

[SunJ]

What is the name of your state? Florida

My wife was involuntarily terminated in July and she received an invoice from her employer requesting COBRA payments for August and September. HMO has a “Safety Net” program that allows for the first 3 months of COBRA to be paid by HMO but her employer said she was not eligible. She made 3 payments to the employer for August, Sept and October, but under protest. Contacted State Insurance Commissioner. They investigated and said she was covered under the “Safety Net” program. The first 3 months paid by HMO, her first payment is due November 1st. Contacted her employer and asked for an immediate refund for the 3 months of payments. He refuses to refund any money.

Her employer collects premiums and pays to HMO. Apparently, he got her approved in the Safety Net program and no premiums are due from him until Nov 1st. But then collects premiums from her for August, Sept and October and isn’t paying anything to HMO because they are paying premiums for her until Oct 31st. He is putting her premiums right in his pocket and laughing at her. We also must assume he has used this loophole for everyone he has terminated. He collects the first 3 months of premiums, employees assume they must pay or lose COBRA coverage, and the employer isn’t required to pay HMO a single cent for the first three months. HMO does not notify the employee of this coverage, only the employer, but it is in her HMO contract and she pursued it.

Any ideas on how she can resolve this issue and get her money back from the employer?

Also, we are thinking this may be fraud but don’t know where to go with this from here.

Thanks in advance!

 

[Beth3]

If your wife's employer is actually pocketing three months of COBRA payments from ex-employees, that really stinks.

My first thought is that you should try your "free of charge" options - contact your State's Insurance Commission and the federal Department of Labor and see what they advise.

 

[SunJ]

Stinks sounds like the correct word. She is talking to the State Insurance Commissioner but all she is getting from them is the correct information that the HMO won’t give to her. HMO has told them she is in the Safety Net program and no payments due from her until Nov 1st. That means no payments due from the employer until Nov 1st also! They are presently investigating to see what the employer intends to do with her premiums. But, it doesn’t appear they are going to do anything about the employer pocketing her Cobra premimums. We thought for sure they would help. She did call the Dept of Labor and they won’t get involved because the employer did put her on COBRA, they apparently don’t get involved in the billing part of it.

We continue to believe the employer is breaking the law! He is collecting COBRA payments that he knows he does not have to forward on to the HMO! Sounds like criminal activity to us. But, we don’t know were to go with this.

Any thoughts on this subject???

 

[cbg]

Talk to the Federal Deparment of Labor. COBRA violations come under their jurisidiction, not the state insurance commission.

 

[Beth3]

I agree that it sounds like the company is fraudulently collecting COBRA payments. Contact the federal DOL again and speak to someone else however it is possible this particular situation is out of their jurisdiction. If that's the case, then your only other option is to speak to an attorney.

 

[SunJ]

“Talk to the Federal Deparment of Labor. COBRA violations come under their jurisidiction, not the state insurance commission.”

Already spoke with the Federal Deparment of Labor. They will only get involved if the employer didn’t initiate the COBRA coverage. He did. As for how he is collecting and dispersing the funds, they don’t care.

I thought COBRA is insurance. Why isn’t it under the jurisdiction of the state insurance commission? They are helping with providing information they are getting from the HMO and are investigating what the employer is planning to do with the premiums collected. But we feel that is as far as they are going with this. They are providing information only, not a resolution.



“I agree that it sounds like the company is fraudulently collecting COBRA payments. Contact the federal DOL again and speak to someone else however it is possible this particular situation is out of their jurisdiction. If that's the case, then your only other option is to speak to an attorney.”

We’ve thought of contacting an attorney, but the costs could easily surpass the value of the premiums. What type of attorney would handle something like this? Our phone book is loaded with many specialties, but not COBRA.

We are going to contact the Federal DOL again and also thinking about the Florida State Attorney.

This is the HMO’s website explaining the benefit my wife is entitled to and according the the state insurance commissioner she is enrolled in:

http://www.aetna.com/products/safetynet.html

 

[Beth3]

Your issue is not with the HMO. They are meeting their obligations outlined in their contract with the employer. Your employer is also meeting their obligations to extend COBRA continuation. (COBRA is not a separate insurance plan. COBRA only obligates employers to extend coverage - at the employee's expense - following the end of employment under certain conditions.)

The only issue you have is that the contract with the HMO apparently doesn't obligate COBRA continuants to pay for the insurance premium for the first three months (which is highly unusual, actually.) The question therefore is whether the employer is fraudulently collecting those premiums. Since everyoone involved is meeting their STATUTORY obligations, that's quite possibly why the DOL will not get involved. It does strike me as something your State Insurance Commission might handle however but if they've refused, then the only other recourse you have is to pursue this as a civil matter.

I would suggest you at least speak to an attorney about this issue. You could do that at no cost or minimal cost. You might find you're able to pursue reimbursement of those premiums on your own through small claims court.

 

[SunJ]

We know that HMO is not the problem. They are not involved in this matter. It’s the employer collecting premiums from my wife and not passing them on to the HMO. He is keeping them! Like I mentioned earlier, we think this is fraud and we wonder if this has been going on with other employees that have been terminated. Since HMO doesn't notify employee they are in the Safety Net program, they would pay the monthly premiums requested by the employer so they would be covered by COBRA. Once he gets those premiums, he won't give them back.

Getting an attorney is becoming more realistic, but her employer has a large firm representing them and we feel this could get very expensive. Strangely, the employer is spending a lot of money with this law firm on this very issue to try and prove he can keep this money. That’s why we think he has done this with other terminated employees. We think this employer needs to be investigated for possible wrong doing.

If the employer was collecting these premiums and passing them on to HMO, there would not be a problem. But, the HMO says no premiums are due from us or him! Since he collected the first 3 months of premium and is keeping them, that’s the problem!

Any more thoughts would be appreciated...

 

[SunJ]

Please let me clarify on thing I said in my last reply.

<<Strangely, the employer is spending a lot of money with this law firm on this very issue to try and prove he can keep this money. >>

For an employee to be eligible for the Safety Net program, the employer has 30 days to inform HMO that employee was terminated because of a layoff. An employee is only eligible for Safety Net because of a layoff. Since she is in the Safety Net program, that means her employer did indeed inform HMO of the layoff. My wife assumed from the beginning she would be in this program, so when she received a bill from the employer for the first 3 months of COBRA, she protested and started making phone calls. When the employer realized he’d been caught with his pants down, he got his high price attorneys involved, trying to cover his butt. They are trying to convince HMO to remove her from the Safety Net program using something other than the real reason she was terminated. I presume if they are successful (the only way they can be successful is to lie about the termination), then HMO will collect the 3 months of premiums from the employer and he won’t have to consider returning the premiums to her, which he steadfastly refuses to do! But keep in mind, the 30 day period the employer had to make the determination is over. His attorneys contacted the HMO on about day 45. We are not so sure HMO is going to accommodate the employer.

When she was terminated, employer said “terminated for economic reasons.” He wanted her to sign a separation agreement and offered some severance with it, but she refused because of the wordage in the agreement. This really ticked the employer off and on several more occasions he asked her to sign and said all of their problems would disappear. She outright refused. When she applied for unemployment compensation benefits, employer fought it saying termination was because of “poor performance (changed from economic reasons),” but again he said if you sign the agreement, I won’t stand in the way of you collecting unemployment benefits, even put it in writing! Florida Unemployment said “employer says poor performance, but employee did the job to the best of her ability, so full benefits are allowed. Not terminated because of misconduct.” In other words, she was terminated because of a layoff, not anything related to misconduct. BTW, her ex-employer's competitor hired her within a month.

The only way the employer’s attorneys can convince HMO to remove her from Safety Net is to convince them of misconduct. That would certainly be a lie and it would be far different from what the employer originally told her "economic reasons" and what he then told to Florida Unemployment "poor performance."

I know I’m a bit winded, but I hope that clarifies things a bit.

Again, looking for ideas..... Thanks