Just one question: Did the employee have medical documentation and approval to be off work after the FMLA leave expired?

If your organization's policy or practice requires approval for the period of FMLA leave, and the employee failed to obtain approval to be off, the employee could possibly be disciplined up to including termination. If you terminate the employee, you can also terminate the health insurance. Once the insurance coverage has been terminated, it becomes a qualifying event for COBRA.

If termination is not applicable, I would check the health insurance plan description or your organization's procedures for my information concerning employee's elgibility during leave.

I hope my comments have been helpful to you. Thanks.