ERISA plan administrator penalized for failing to provide plan documents.
A common question we get asked by claimants is whether you have a right to see your employer-sponsored disability policy. Claimants or prospective claimants often have trouble obtaining a copy of the disability policy or a Summary Plan Description (“SPD”) when they are denied benefits or attempting to or thinking about applying for benefits. The policy or SPD should contain all the important information related to a disability claim including how to make a claim, what disabilities are excluded by the plan and any plan limitations. What can be done when you have trouble getting a copy of the policy?
In a recent case out of the Sixth Circuit, an Ohio District Court awarded the Plaintiff a little over $4,000 for the Defendant’s failure to provide plan documents upon request. While the amount of the award was nominal, it nevertheless served as a reminder to the administrator, and other ERISA plan administrators that failure to comply with ERISA guidelines can cost you.
Mr. Kanoski worked at Sterling Paper Company for 24 years, before his termination on January 11, 2010. Kanoski was a participant in his employer’s ERISA governed pension benefit plan administered by Sterling. Mr. Kanoski requested specific plan documents from Sterling which Sterling initially refused to provide. According to Mr. Kanoski he made five separate requests for specific documents to Sterling.
Under ERISA Sterling had 30 days after Mr. Kanoski’s request to mail the material requested to Mr. Kanoski’s last known address or face a possible penalty of up to $110 a day for the violation. Sterling took seventy-seven (77) days past the 30 day deadline to produce the requested information.
When Mr. Kanoski brought suit seeking a statutory penalty pursuant to ERISA Sterling argued that Mr. Kanoski had not shown that he was injured or prejudiced by Sterling’s violation and therefore judgment should be entered in Sterling’s favor. However, as the court pointed out, such as showing is not essential–explaining that the sixth circuit has determined that the primary purpose of the statute “is to punish plan administrators who fail to comply with requests for documents which ERISA requires them to provide.”
ERISA allows courts’ discretion to impose penalties for failure to provide documents.
Although such penalties can be up to $110 a day the court can decide the amount of the penalty if any at all. In this case the Ohio District Court decided to impose a small penalty against Defendant Sterling Paper in the amount of $10 per day, per document, for a total award of $4,620.
It is important to remember that the obligation to produce plan documents is not triggered unless and until the participant or beneficiary give the administrator “clear notice” in writing of the information they desire. A verbal request by phone does not trigger the administrator’s obligation.
Although a court will not impose penalties in every case if you are having trouble obtaining the policy or other plan documents from the administrator it may help to remind the administrator that it has 30 days to comply or it could cost them.