Risteen v. Youth for Understanding, Inc., et al.
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The U.S. District Court for the District of Columbia found that a company’s buyer was a “successor employee” for COBRA purposes, and thus, it was responsible for seller’s obligation to provide a former employee with COBRA coverage.
Summary of Filed Complaint
TELG client Paul F.X. Risteen alleged that his employer discriminated against him based on his perceived sexual orientation and disability. Risteen also alleged that his employer failed to pay him wages and failed to continue his COBRA coverage.
What Happened in Court
ERISA, as amended by CORBA, requires that an employer who sponsors a health insurance plan must offer employees and qualified beneficiaries the opportunity to continue their health insurance coverage, at group rates, but at their own expense, for at least 18 months after the occurrence of a qualifying event (such as a termination). In certain circumstances, a successor employer resulting from a business reorganization will have the obligation to continue COBRA coverage. One of those circumstances is the transfer of substantial assists. The Court found that in Risteen v. YFU there was a transfer of substantial assets from YFU to YFU USA; this constituted an asset sale and required YFU USA to continue COBRA coverage to Risteen.