Synergy Blog

ERISA Plan Penalized For Failure To Produce Documents

In Harris-Frye v. United of Omaha, (E.D. Tenn. 9/21/15) the court assessed $61,380.00 in penalties against the ERISA Plan Administrator for failure to produce the “Plan Document”. This case underscores the importance of properly requesting ERISA Plan Documents pursuant to 29 U.S.C. §1024(b)(4) early in the underlying personal injury case. The court in this case wrestled more with the length of time for which penalties should be assessed rather than if penalties should be assessed for the Plan’s non-compliance. As Synergy consistently advises our clients, the court makes it clear that it is the filing of a proper 29 U.S.C. 1024(b)(4) request that triggers the start date for penalties.

“The proper start date for penalties under 29U.S.C. 1132(c) is 30 days after the plan administrator receives a request.”
Harris-Frye v. United of Omaha, (E.D. Tenn. 9/21/15)

In the following passage, the court does a good job of expressing the purpose of 29 U.S.C. § 1132(c) penalties and reiterates the standard courts should use in assessing the amount of those penalties.

“The purpose of the penalty is not to punish defendants’ bad faith actions or for any resulting prejudice to plaintiffs, but rather “to induce administrators to timely provide participants with requested plan documents, and to penalize failures to do so.”
Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir.1994).

“29 U.S.C. § 1132(c), therefore, seeks to punish administrators for their failure to respond to beneficiaries’ requests, not to compensate beneficiaries for their lack of access to requested documents.”
Harris-Frye v. United of Omaha, (E.D. Tenn. 9/21/15)

In this case, the ERISA Plan Administrator argued that their failure to provide the Plan Documents did not prejudice the plaintiff, nor did they act in bad faith. Trial attorneys often hear this argument from recovery vendors when they confront them with clear evidence of their client’s (the ERISA Plan Administrator) failure to comply with a proper 29 U.S.C. §1024(b)(4) request. The court in Harris-Frye repeats what is the clear rule and what should be the response of every trial attorney to this argument when raised by the recovery vendors:

“Notwithstanding Defendant Board of Trustees’ repeated arguments that statutory penalties are inappropriate due to the lack of prejudice to Plaintiff and Defendant Board of Trustees’ alleged good faith, neither prejudice nor bad faith is required to impose a penalty under 29 U.S.C. 1132(c). See McGrath v. Lockheed Martin Corp., 48 F. App’x 543, 557 (6th Cir. 2002) (“In awarding the $7,700.00 in penalties [under 29 U.S.C. 1132(c)], the district court was not required to make a finding that plaintiff’s right to administratively appeal ES Plan benefit decisions was prejudiced, or that Westmoreland acted in bad faith.”); see also Gregory v. Goodman Mfg. Co., L.P., 2012 WL 685283 at *3 (E.D. Tenn. Mar. 2, 2012) (“To the extent that Defendant suggests that penalties may be imposed only after explicit findings of bad faith and prejudice, it is mistaken.”).”
Harris-Frye v. United of Omaha, (E.D. Tenn. 9/21/15)(emphasis added)

Though the court makes it clear that bad faith is not required to assess penalties, they do seem to take into consideration the actions of the ERISA Plan Administrator in assessing the maximum penalty.

“Given Defendant Board of Trustees’ deliberate choice not to respond to Plaintiff’s unambiguous [ ] for documents, and Defendants failure to respond at all to either the second or third request for documents, (see Doc. 39 at 15–16), the Court finds that assessing the maximum penalty is appropriate in this case. Accordingly, Defendant Board of Trustees will be assessed a penalty of $61,380.00 for its failure to furnish a copy of the Plan Document, calculated at $110.00 per day for the 558 days between May 31, 2013 and December 10, 2014”
Harris-Frye v. United of Omaha, (E.D. Tenn. 9/21/15)

In a world where ERISA recovery vendors are relying on U.S. Airways v. McCutchen to demand 100% repayment from injury victims, it can’t be emphasized enough that every tool available to the trial attorney needs to be employed to protect the plaintiff. A proper 29 U.S.C. 1024(b)(4) request made upon the Plan Administrator is the essential first step. Should you need assistance on how to make this request, what forms to use, or where to send them in order to trigger the statute please contact Synergy Lien Resolution Services. Synergy has broad experience and an excellent success rate with significantly reducing ERISA liens even post McCutchen.

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