Termination for gross misconduct and COBRA rights.

• Author: Cvach, Gary Q.
• Position: Consolidated Omnibus Budget Reconciliation Act of 1985 - Brief Article

The termination of an employee for gross misconduct is not a "qualifying event" that would trigger COBRA health insurance continuation rights for the employee's dependents, according to Mlsna v. Unitel Communications, Inc., 7th Cir., 11/30/94.

The employee had tendered his resignation on January 23 and actually left Unitel on that day. But Unitel contradicted the employee's assertion that he had left after resigning, saying he was fired on January 25 for competing with the company. Unitel provided no COBRA notices to either the employee or his dependents. After the termination, the employee's spouse acquired health insurance coverage through another company, but lied about preexisting conditions. When she then required medical treatment, the new insurance company refused to pay; she then sought payment from Unitel on the grounds it had failed to inform her of her COBRA rights. The lower court found the employee had tendered his resignation; such a tender created the qualifying event under COBRA, for which Unitel should have provided notice and, if the parties elected, coverage.

The Seventh Circuit ruled that a tendered resignation does not constitute a qualifying event for COBRA purposes, saying, "Only when the employee ultimately leaves the company, or has his hours...