The plaintiff, Hager, was DBG’s CFO until August 15, 2014. By a letter hand-delivered to Hager’s home address that day, DBG’s CEO notified Hager that he was fired. The plaintiff elected to continue his enrollment in DBG’s health plan with Blue Cross Blue Shield through COBRA. In May 2015, DBG decided to terminate its health plan. DBG has produced a letter addressed to Hager’s former address — not the address where it sent Hager’s termination letter — stating that it was terminating that coverage effective June 1, 2015. Hager contends he never received this letter. He continued paying his insurance premiums to DBG through August 2015, and DBG deposited his checks. From June to August 2015, Hager underwent colon cancer treatment. In August 2015, Hager learned that he had not been covered during those months.

Initially addressing the question of whether plaintiff could sue as a plan Participant, “this circuit has suggested that a plaintiff has ERISA standing if he would be a plan participant but for the employer’s conduct alleged to be in violation of ERISA…. Otherwise, employers would be able to avoid ERISA lawsuits simply by terminating their employees’ health benefits.”

Then, with respect to the duty to provide notice under COBRA, the Court found that “DBG discontinued its health plan earlier than 18 months after Hager was fired. It therefore had an obligation to notify Hager ‘as soon as practicable’ that it was discontinuing coverage.”

While rejecting any claim for benefits under Section 1132(a)(1) (as the plan had terminated and no benefits were due), or appropriate equitable relief under Section 1132(a)(3) (“The remedy Hager seeks is not equitable. Aside from the fact that he does not explicitly ask for restitution, Hager seeks money damages for all medical expenses, which is a claim for money that is in the general assets of DBG, which were not received from, and have not been promised to, Hager”), the Court then addressed the availability of a penalty under Section 1132(c):

“When an administrator fails to provide notice of COBRA eligibility, courts have stated that the aim is to place the plaintiff in the same position he would have been in had full continuation coverage been provided, and to induce compliance by plan administrators. In this vein, some district courts have deemed it proper to award medical expenses as a penalty under §1132(c). We can discern no barrier to the court awarding the amount of Hager’s medical expenses as a penalty. But the appropriateness of a penalty, and the amount of such penalty, if appropriate, will require factual findings concerning DBG’s good faith, which, as noted above, is disputed.”

Hence, the Court remanded to the District Court for a determination of whether, and if so what, penalty might be appropriate, as well as the plaintiff’s claim for attorney’s fees.


Hager v. DBG Partners, 903 F.3d 460 (5th Cir. 2018).