Costco Settles COBRA Notice Language Suit for $750,000, Admits No Liability

April 25, 2022
Hall Benefits Law, LLC

Costco Wholesale Corp. and plaintiff John G. Baja asked a Florida federal district court to approve their $750,000 settlement in a proposed class-action lawsuit, challenging the retail giant’s allegedly deficient COBRA notices. Baja claimed that the defective notices about Costco’s continuing health care options, upon the occurrence of qualifying events, deterred him and thousands of others from choosing the available benefits. 

Baja filed the complaint in Baja v. Costco Wholesale Corp., case number 0:21-cv-61210, U.S. District Court for the Southern District of Florida, in June 2021, claiming that he was entitled to continuing health care coverage after Costco terminated him, following more than ten years of employment. The COBRA notice that Baja received allegedly made him choose not to enroll. Baja also claimed an average plan participant could not understand the notice as written. The notice contained a warning that Baja could be penalized if he filled out the paperwork incorrectly. Additionally, Baja claimed that his decision to opt-out of the coverage led to him paying out-of-pocket for medical procedures. 

The proposed class includes 38,818 former Costco employees who received the allegedly deficient COBRA notice between June 9, 2018, and June 9, 2021. None of the class members chose to continue the health benefits available under COBRA. 

If the court grants the total amount of attorney’s fees that Baja’s attorneys have requested, along with litigation costs, and an award for Baja, each class member would receive approximately $9.72. This amount is similar to what class members have received in other COBRA notice class action cases. The parties reached this settlement through mediation with a mediator specializing in ERISA cases. The parties expect that the court will approve the settlement and certify the class for settlement purposes. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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