ERISA generally requires that plan participants get copies of summary plan descriptions, plan documents and annual reports when requested. ERISA Section 104(b)(4) provides that “the administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.” There is even an enforcement provision that subjects the administrator to penalties if they fail to provide requested documentation. ERISA Section 502(c)(1) establishes that an administrator who fails to respond to a participant’s request for certain plan materials within 30 days could be subject to penalties of up to $110 per day for each day past the 30-day response time if the documents are not provided.
For administrators, this obligation can even apply if the participant is not specific in their request for documentation. Such was the case in Cultrona v. Nationwide Life Insurance Company, a recent case out of the 6th Circuit Court of Appeals. Cultrona filed suit against Nationwide Life Insurance Company after an accidental death claim for her late husband was denied. During the appeal process, her counsel wrote a letter to the plan administrator requesting “all documents comprising the administrative record and/or supporting Nationwide’s decision.” Oddly, the administrator did not provide a copy of the actual accidental death policy for almost 7 months.
The district court entered awarded $8,910 in statutory penalties to her because of the delay ($55 a day) and the administrator appealed. The administrator argued that the penalty was not warranted because she did not specifically request the document. It claimed that “clear-notice” should be applied, requiring participants to provide clear notice to the plan administrator of the information or documentation they desired. While the Court agreed with the administrator that “clear-notice” was the standard to apply, it found that the administrator should have known from the request that they were being asked for a copy of the policy. Since it was clear that the policy would have to have been part of the review, it was clear it was being requested. Then the Court upheld the penalties.
For plan administrators, “clear notice” can be a tricky standard to try to sort out. Plan administrators should consider that ERISA clearly favors the production of documents when requested and recognize that a poorly worded request could still be enough of a request to warrant penalties. A simple solution is for administrators to avoid being accused of hiding plan documents. When responding to a request, give them what they ask for, and maybe even more (like what is required under 104(b)(4)). And if you have questions about how to respond to a request for documentation, ask for guidance from your professionals. That’s what we are here for.