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Recently, a district court awarded $41,140 to an employee for an employer’s failure to timely furnish health care plan documents upon the employee’s request. This case highlights the legal obligation by plan administrators (who are usually employers) to provide plan documents within 30 days when requested by participants and beneficiaries.

 

Compliance Snapshot:

    • Plan administrators must furnish health care plan documents to plan participants and beneficiaries within 30 days of their request;
    • Plan administrators who fail to furnish plan documents within 30 days may face a penalty of up to $110 each day the documents are not furnished.

 

Case Summary

An employee, who was a participant in their employer-sponsored ERISA health care plan, sued their employer for the improper refusal to pay a medical claim. During the lawsuit, the employee submitted a written request for documents related to the health plan, including the plan document (including any insurance policy or contract), latest updated summary plan description (SPD), latest IRS Health and Welfare Form 5500, contracts with health providers, and other plan documents.

The employer, who acted as the plan administrator of the plan, failed to respond to the employee’s request until two years later. The district court found that the employer’s failure to furnish plan documents was a violation of their legal obligation and negatively impacted the participant’s ability to appeal their medical denial and litigate their case. The court awarded the plaintiff $55 per day (half of the maximum of $110 per day) for each of the 748 days that the employer did not provide the documents, for a total penalty of $41,140.

This case serves as a reminder for plan administrators (and employers) to timely provide plan documents upon request, even if they previously provided the documents to plan participants. Plan administrators’ legal obligations are outlined below.

 

Legal Obligation to Furnish Plan Documents upon Request

Plan administrators must furnish copies of certain documents related to employer-sponsored ERISA plans upon written request by plan participants and beneficiaries within 30 days after the written request. The documents include the latest updated Summary Plan Description (SPD), latest Form 5500, trust agreement, and other instruments under which the plan is established or operated.

 

Potential Penalties

A court may award up to $110 for each day after the 30 days a plan administrator fails to provide the plan documents. When determining whether to impose a penalty, a court can consider whether the failure to provide the plan documents prejudiced the plaintiff or whether the plan administrator did so in bad faith.

 

Action Items

  • Employers should determine whether they are the plan administrator for their employer-sponsored ERISA plan and determine their legal obligation to furnish documents;
  • Plan administrators should pay attention to any request for plan documents by plan participants and beneficiaries and provide the requested documents within 30 days; and
  • Plan administrators should implement an internal procedure for tracking requests and providing documents to ensure compliance with their legal obligation.

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.