My former employer cashed my COBRA payment 2 months ago but never paid the insurance payment

[Ex of the Worst Employer]

I have been fighting with the benefits group of my former employer for the past 7 weeks. I was laid off, opted for Cobra, company paid 2 months and I started paying in month 3 (October). I sent my check in time for the due date, the company received and deposited my check but never applied it to my account. 

I noticed this a week after the payment was due when I logged into the benefits site to confirm everything was all set. When it showed it wasn't paid, I reached out to check on it and I was told they never received the check so I provided them with a front & back copy of the cancelled check that I had received in my bank statement. Proving that they did in fact receive and deposit the check. 

I also paid month 4 - November payment which they received, cashed and applied to my account and have paid December which has not yet been cashed or applied but not worried since it is well within the grace period and I believe they are holding it and it will eventually come back to me which will become clear why below. 

For the past 7 weeks I have been getting the run around from the company claiming (A) The check was not received (I provided  copy 5 days after they deposited it) (B) They sent the check back to me (they gave no reason why, just that it wasn't applied because they sent it back to me. Reminded them that I uploaded a copy of the front/back of the cashed check so they couldn't have sent it back to me) (C) They sent a refund check to me (I asked for details of when, where & to whom they sent it as well as a copy of front/back of the refund check if it had been cashed - I've gotten no response). (D) They credited my bank account (asked for details including the bank routing #'s and account that they credited and a copy of the receipt for the deposit to my account and the reason for the return of the funds - crickets because it didn't happen).  (E) The check was returned for insufficient funds 6.5 weeks ago (This one was my favorite!!! I asked for a copy of the ISF notice they received - once again, it didn't happen because I got the cancelled check back in my statement showing it was paid to their account ). 

I also received two statements in November, the first just before Thanksgiving, showing the October & November payments and only December due - generated after I called to question the payment and showed proof of payment and the second generated after Thanksgiving and the October payment has been removed again. 

Last week I gave until Friday afternoon to resolve this or I would file a complaint with Department of Labor COBRA division - On Sunday evening, yesterday, my insurance was cancelled without notice. 

I immediately opened a claim with DOL, uploaded all my proof of payment, copies of conversations (including the excuses) and statements of amounts owed. They called me back this morning and got to work contacting the former employers corporate lawyer. I also had surgery scheduled for today and DOL contacted the hospital where I was to have the surgery and made sure they knew the insurance was cancelled in error and the hospital agreed to continue the surgery. GO DOL!!!

My concern is now that they have cancelled my insurance due to their error that they have refused to fix, does anyone know how long it takes to be reinstated, I cannot get an answer from the worlds worst employer and what about my 2025 insurance? I have previously elected COBRA for my 2025 coverage but if they take this past the final signup date, can they screw me on that too? 

I am concerned that they are holding the December check and will return it to me at some point since I no longer have active insurance. I am prepared to send a second check for December if/when the check comes back uncashed or sooner so they have it in hand when the insurance is reinstated and to avoid them saying that my payment was out of the grace period. 

I can't imagine this is legal, cashing my check but not paying my insurance and I understand that mistakes happen but I spoke to no less than 5 different people who all came up with a different, ridiculous excuse for why it was not applied, each excuse instantly proved false by the cancelled check I uploaded to their system weeks ago. 

I've been told for the past 2 weeks that they are escalating this to the leadership team for review and finally today, after DOL got in touch with their corporate benefits lawyer that  "We went through the check images you provided, and are escalating to the bank processor for further review of the October payment."

Can they be fined by DOL? Pay a hopefully hefty penalty? Do I have other recourse or based on experience, should I be comfortable that they will reinstate my insurance and stop playing games? 

I give props to DOL, they reacted quickly and totally took care of me today and I have faith in the DOL rep but no faith in the worlds worst employer who after speaking with 5 different people, getting 5 different excuses and taking 7 weeks with nobody truly looking at this I have two options: Believe these are the most incompetent workers ever hired anywhere or this company is purposely doing this to ex-employees to screw up our insurance. 

Disclaimer: Writing this on pain killers after surgery today, I realize it's lengthy, I hope it makes sense  

 

 

 

 

 

[Brian Gilmore]

First of all, sorry to hear about your medical situation.  Also, sorry to have to deal with the medical and health insurance side at the same time.  That's always difficult.

The good news is that you have an EBSA Benefits Advisor on the case and providing significant assistance.  As long as the medical providers continue to provide services (fortunately the DOL was able to assist with that re the surgery), all the claims can be retroactively processed and paid correctly through COBRA if/when this issue gets resolved.

The DOL can impose $110/day penalties.  Even if there is some aspect of the situation that is somewhat more favorable to the employer's side that isn't mentioned here, at a minimum they failed to promptly provide the Notice of Termination as required.  But generally the DOL will try to exhaust all efforts to resolve the issue informally without the need to take it the enforcement level If it doesn't get resolved. 

Absent the EBSA being able to satisfactorily resolve the issue, it sounds like you have an excellent case that any plaintiff side attorney should be salivating to take.  That would allow you to pursue recovery of payment for any claims that should have been paid under the plan, plus "other relief" as the court deems proper.  Again, an attorney would likely get creative here given the medical situation, etc.

[LPHR]

Sorry for the hassle.  Question, when you say that you "opted for COBRA" initially, did you acknowledge to the employer's offer of COBRA (as part of a separation agreement) or did you actively apply/enroll for COBRA? Enrollments can get wonky when part of your severance package covers COBRA payments and when you enroll for COBRA around/near Open Enrollment.  It happened to me 2 years ago when my position (as a benefits manager) was eliminated in October. The benefits department and the COBRA TPA messed up both enrollments---when first eligible and for the following year.  I'm just wondering in the insurance carrier/TPA ever had your enrollment on record. With the October and November statements, were those amounts your former employer paid? I know I asked a lot of questions, but just troubleshooting based on what I've seen happen when administering COBRA on behalf of the employer.

I'm glad you received a timely response from EBSA.

[Ex of the Worst Employer]

@Brian Gilmore @LPHR - There is nothing that I am hiding, nothing that I have left out. I got 2 months of COBRA from my employer Mid-Aug to Mid-Oct.

My first payment was a prorated amount due mid Oct and paid before due date. My second payment for Nov was paid end of Oct and December at end of Nov but not yet applied - I assume it’s been received but until deposited or sent back due to cancellation, it’s just an assumption and I’m willing to resend if necessary once I’m reinstated. 
 

They cashed but did not apply the October payment

They cashed and applied the November payment

They have (assuming) the December payment and can’t apply it until they reinstate me  

I have a letters dated Oct confirming I completed the COBRA worksheet and a letter confirming enrollment through end of December 2024. I also have a letter dated Nov confirming enrollment through 2025.
 

I have statements from Oct, Nov & Dec. I have letters confirming I changed my phone # - I mention this to show that the company is aware and has confirmed my enrollment for both 2024 & 2025.

The only continuing issue is the refusal to apply the October payment that they cashed on October 17th. 
 

After providing them with a copy of the processed check, deposited to the employer bank account and paid by my bank - they have given me every excuse from never received to returned for NSF. 

All disproved by the check they deposited. I don’t know what they did with the funds on their end and only care that they do the right thing and apply it to my account. 
 

i am very lucky to have the representation from DOL that I do and very appreciate of that. 

Personally, I’d love to see the company receive daily fines to avoid anyone else going through this but not looking for anything financially for myself, just my med bills reactively paid. 

Thanks for the quick responses and here’s hoping things work out before my next follow appt. 
 

 

[LPHR]

Ugh. That is a mess.  

 

For what it's worth, reinstatement can happen almost immediately. Technically, the process would be to wait for the weekly file feed, but given the errors, the COBRA administrator can email the carrier and request immediate reinstatement. Similarly, I have on scores of occasions emailed the insurance carrier once I can see the person has enrolled for COBRA and asked them to reinstate ASAP. I have also manually re-enrolled a participant once I see that they have made the COBRA payment. The process of the file feeds from entity to entity can take a couple of weeks given the sequencing and processing of file feeds.

Hopefully things will move along now, but I feel your pain.  Do you know the doctor well (i.e., have you been a patient for a while), maybe you can ask them to hold billing you until you know you're reinstated.

L

[Ex of the Worst Employer]

Thank you once again for the quick reply, I did get an apologetic call today from the legal department at the worlds worst ex-employer. They have of course heard from the DOL, they looked into the issue and called to apologize stating they saw the notes with the various excuses and were appropriately embarrassed that anyone would make any of those statements when it was clear that the Cobra payment had been made on time and the error is clearly on their side. 

It's justification just to have someone admit the ridiculousness of this situation. 

My insurance has been reinstated, they show the Oct & Nov payment at this time and December is either being held or sent back and we've agreed to give it a week before I send another check - the grace period is through the end of the month so plenty of time to give it a week. 

Thanks for all the info and helping to alleviate some of the stress.