Due to the lowered premium advantages gained through group coverage the company had negotiated the plan for its employees but had never paid the premiums. Unfortunately, on the insurance application the company's human resource office was listed as the plan administrator. The fact that Richmond paid his own premiums and had for some time works to the company's advantage. He was obviously aware that this had been the case for some time. Why he thought that the company would pay his premiums during his period of disability is unknown.

The problem for the company is that the only notice provided regarding the failed premium payments is the company and the results of the insurance being terminated are so disastrous. Richmond has been placed in an untenable position. He is facing astronomical medical costs and the inability to acquire new coverage.

The effort needed to notify the employee relative to the health insurance company's notification regarding the missing insurance premium was minimal. The fact that the premium were automatically deducted from the employee's check and that once he went on worker's compensation such deductions were no longer being deducted should have alerted the human resource office of potential...

This was a breakdown in the internal operations of this department.
Conclusion

The costs involved in the Richmond case are considerable. It is factor that bears heavily on the available options. The COBRA conversion time is still open for the Richmond but he is unable to afford the considerable lump sum payment. The company is in a much better position to absorb this cost.

Recommendation

In light of the facts and the prevailing law on this matter it would best for the company to pay the COBRA premiums due which allow the employee to be covered under his old policy. This will allow the employee to be covered in the interim and place him in a better position to obtain coverage in the future. To do otherwise, would expose the company to possible litigation costs and strong likelihood that it could be liable for all Richmond's future medical costs.