Costco Allegedly Uses False Threats to Scare Employees From Using Health Insurance Benefits
According to a new class action lawsuit, Costco’s COBRA insurance notice contains “inaccurate and misleading threats” that scare employees away from obtaining the continuous coverage they are entitled to.
The Class Action Lawsuit
Lead plaintiff John Baja filed the nationwide class action lawsuit on June 9 in Fort Lauderdale, claiming that Costco’s COBRA notice puzzled him with misleading language. This caused him to lose the medical, dental, and vision insurance that he was entitled to.
Moreover, the loss of the plaintiff’s health insurance resulted in further real harm in the form of stress and anxiety.
As per the class action lawsuit, Costco has repeatedly violated ERISA by failing to provide adequate notice, as required by COBRA, to participants and beneficiaries in its insurance plan of their right to continue health insurance coverage following the occurrence of a “qualifying event” – such as termination of employment.
According to the claim, the goal of COBRA is to assist individuals in electing continuous coverage if they so desire, rather than to discourage them from doing so, as Costco does.
Baja worked at Costco for 11 years, during which he obtained medical insurance for himself and his wife before being sacked when he requested to be excused from lifting heavy objects due to his persistent heart ailment.
According to the class action lawsuit, Baja was entitled to continuation coverage because he was not fired for severe misbehavior and was sent the inadequate COBRA notice by Costco’s insurance administrator.
Furthermore, Baja experienced medical-related expenditures that he had to pay out of pocket as a result of his failure to grasp Costco’s COBRA notice, and at least one of those medical bills was sent to collections, where it remains until today.
Costco’s COBRA Notice
In the lawsuit, Baja claims Costco’s COBRA notice is an attempt to scare people away from electing COBRA.
It does so by offering an alarming warning that submitting even “incomplete” information when opting for COBRA may result in civil or even criminal fines, according to the lawsuit, which also claims that the notice “needlessly” refers to a $50 IRS penalty.
According to the claim, the material is provided without context, much alone an explanation as to why prospective criminal fines or IRS penalties are relevant to the COBRA election process.
Also, providing such material inhibits people from electing continuation coverage and distorts the information supplied in the notice, and prevents people, including Plaintiff, from electing COBRA.
Baja wants to represent everyone who is in Costco’s health plan with a COBRA notice from the firm. He is seeking certification of the Class, an order of enjoinment, damages, legal expenses, interest, and a jury trial for violations of the Employee Retirement Income Security Act of 1974.
Editor’s Note on Costco COBRA Insurance Class Action Lawsuit:
This article is published to inform you of the latest class action lawsuit filed against Costco. Allegedly, its COBRA insurance notice contains “inaccurate and misleading threats” that scare employees away from obtaining the continuous coverage they are entitled to.
Case Name & No.: John Baja v. Costco Wholesale Corporation, Case No. 0:21-cv-61210-XXXX
Jurisdiction: United States District Court, Southern District of Florida Fort Lauderdale Division
Products/Services: Costco’s Health Insurance Benefits
Allegations: Costco’s COBRA insurance notice allegedly scares employees from claiming the insurance
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