Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employees who are terminated for any reason other than gross misconduct are entitled to continue their employer provided health insurance. COBRA doesn't directly define "gross misconduct" and often times it is left up to the court to decide whether or not an employee was fired for gross misconduct. Any employer who denies an employee COBRA coverage after their termination must provide evidence of why and allow the employee a chance to appeal.
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The purpose of the Consolidated Omnibus Budget Reconciliation Act is to grant employees continued health coverage for up to 36 months if they lose their job as the result of a qualifying event. Qualifying events include a reduction in working hours that can end health care coverage, a voluntary termination or an involuntary termination. COBRA became effective in 1986, and has since had amendments made to it. Prior to 1986, employees who were terminated or opted to take another job were not entitled to any benefits from their employers group health plan.
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The Consolidated Omnibus Budget Reconciliation Act states that any employee who is terminated may be entitled to continue their health care coverage, as long as they were not fired due to “gross misconduct.” However, COBRA doesn’t directly define “gross misconduct” and often times it is left up to the courts to decide whether or not an employee was fired due to gross misconduct. Courts have ruled that gross misconduct must be an intentional, outrageous or extreme act, as compared to simple negligence.
Gross misconduct may occur if an employee is known as a repeat offender. For example, if an employee knowingly repeats the same offense despite a warning from his employer, COBRA may consider that gross misconduct. Any illegal activity knowingly done by an employee may be viewed as gross misconduct. Employers have the right to create a written policy that instructs employees on their definition of gross misconduct. Any employee who is convicted of misconduct will lose all health insurance benefits, as will their spouse, children or whoever else the insurance covered.
Boudreaux v. Rice Palace, Inc.
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A court case entitled Boudreaux v. Rice Palace Incorporated stated that gross misconduct does not have to involve any form of criminal behavior. The case centered around an employee who over-medicated herself numerous times while at work, despite the warnings of her employer to stop. The employer eventually fired her, stating that she had become a danger to herself and those around her, and denied her COBRA coverage. The court ruled in the employers favor, stating that the employee knowingly put herself and her fellow workers in danger due to deliberate actions that constituted gross misconduct.
Proof Of Burden
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Despite the fact that COBRA doesn’t have a clear definition of “gross misconduct,” employers who wish to deny recently terminated employees continued health coverage have the burden of proof. Employers must prove that the employee’s termination was solely based upon gross misconduct, as compared to a collection of incidents. The employer must show proof of behavior that rose to the level of gross misconduct, as compared to ordinary misconduct. Lastly, any employer who wishes to deny COBRA coverage must notify the employee of such and give them an opportunity to appeal the decision.