Hello,
Is an employer allowed to continue COBRA coverage past the 36 months maximum? (The former employee is listed as active on the group health plan. The former employee pays the monthly premium to the employer, who in turn pays the health carrier). I can't seem to find anything in the manuals that says "COBRA coverage must be terminated at the end of the 36 months".

The Regulations themselves won't disallow this, but what you need to doublecheck is that your group health plan contract will allow it. If you are keeping someone on the books as an active employee when they are not, that can be insurance fraud.