Employee Who Kept Spouse Enrolled in Health Plan Five Years After Divorce Found Liable for Fraud
Under the Consolidated Omnibus Budget Reform Act of 1986 (COBRA), health insurance coverage provided by an employer can be continued for up to 36 months by an ex-spouse. Technically, this law applies only to employers with 20 or more employees. However, most states have laws that apply COBRA-type benefits to employees of smaller companies.
As part of his divorce settlement, Frank Biondi agreed to maintain his ex-wife's medical benefits for two years. Instead of arranging for her to elect benefits under COBRA, Mr. Biondi continued her enrollment under his existing plan for almost five years after she had lost eligibility. When he eventually notified the plan, the plan sued him for fraud. In a recent decision (Trustees of the AFTRA Health Fund v. Biondi), a U. S. District Court found him liable for reimbursement of over $100,000 in claims paid on behalf of his ex-wife.
In an effort to shift his liability, Mr. Biondi made claims against his divorce attorneys, arguing that they had committed malpractice by failing to tell him what he needed to do to obtain COBRA coverage for his ex-wife and for also failing to tell him that he needed to advise the plan of the divorce. The court rejected his claim and also concluded that it could not allow a person guilty of fraud to profit from the fraud by recovering damages from other parties.
