Terminating the Employment Relationship

Based on the limited case law available, gross misconduct generally occurs when the conduct at issue is outrageous, extreme or unconscionable. 419 Some courts have also determined that the conduct must evince an “evil design” against the employer or, absent malice, “an intentional and substantial disregard of the employer's interests.” 420 b. Notification to the Employee In the event an employer denies COBRA based on gross misconduct, the employer must notify the ex-employee and potential COBRA beneficiaries of the determination (specifying denial based on gross misconduct). The general COBRA notice provisions require that, after a qualifying event occurs, the employee and any covered dependents eligible for COBRA coverage be notified of their option to elect continuation coverage. If that coverage is being denied, the employee and dependents must be notified of the decision and must also be given the right to appeal the determination by the plan administrator. The 2005 amendments to COBRA reference a “notice of unavailability of COBRA coverage” to be provided to plan participants in the event that COBRA coverage is not offered. That notice is sent instead of the election form. The participants then have the ability to appeal the determination that coverage is not available.

If an employer is considering denying an employee COBRA continuation coverage based on misconduct, we recommend the following: 1. Have a record of the acts or omissions giving rise to the termination and how these acts or omissions impacted the business. 2. Have a record of how the termination decision was made that establishes that the termination was clearly made because of the gross misconduct. 3. Provide a “Notice of Unavailability of COBRA Coverage” to the employee and covered dependents with the right to appeal advising them that coverage is being denied because of the termination for gross misconduct.

LCW Practice Advisor

Terminating the Employment Relationship ©2019 (s) Liebert Cassidy Whitmore 130