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McDonald’s Will Pay More Than $150,000 to End COBRA Notice Suit

Sept. 23, 2022, 4:11 PM

McDonald’s Corp. signed a $156,783 class settlement in a federal lawsuit claiming the fast food giant sends confusing and legally deficient notices explaining workers’ right to keep their health insurance coverage after leaving their jobs.

The deal is expected to provide 8,959 people with net payments of between $7 and $10, according to settlement papers filed Thursday in the US District Court for the Southern District of Florida. It covers participants and beneficiaries in McDonald’s health plan who received a COBRA notice between Dec. 15, 2017, and Feb. 9, 2021, and didn’t elect to receive continued health coverage under COBRA.

Class members will receive their settlement proceeds through checks in the mail, and the money associated with any uncashed checks will go to nonprofit legal aid organization Bay Area Legal Services, according to the filing.

The nine-month-old lawsuit claims the notice that McDonald’s sends to inform workers of their COBRA rights omits critical information and is presented in a confusing and piecemeal fashion that misleads workers and results in them losing coverage. In particular, the notice fails to include the address for sending COBRA payments and doesn’t explain the process for enrolling in coverage, plaintiff Ashley Johnson alleges.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, requires companies with 20 or more employees to allow workers and their covered family members to continue their employer-sponsored health coverage for a brief period after they’ve been terminated or experienced another qualifying event. The statute requires employers to notify workers of their COBRA rights and dictates what information must be included in the notices. Violations are subject to penalties of up to $110 per day for each affected individual.

More than three dozen proposed class actions alleging COBRA notice failures have been filed in federal court over the past three years. Some companies have signed class settlements, including Home Depot USA Inc. ($815,000), Costco Wholesale Corp. ($750,000), Fiat Chrysler Automobiles ($600,000), WCA Management Co. ($210,000), Enhanced Recovery Co. ($140,000), and Goodman Group Inc. ($112,240).

The McDonald’s settlement is subject to approval by Judge Federico A. Moreno, who hasn’t issued a ruling on the company’s motion to dismiss.

Johnson is represented by Wenzel Fenton Cabassa PA, which is authorized to petition the court for up to one-third of the settlement amount as attorneys’ fees.

Faegre Drinker Biddle & Reath LLP represents McDonald’s.

The case is Johnson v. McDonald’s Corp., S.D. Fla., No. 1:21-cv-24339, motion for preliminary settlement approval 9/22/22.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com