Does the Insurance Company or the Employer Pay Penalties for Failure to Produce Group Plan Documents?
A Federal Law Called ERISA Gives an Employer Plan 30 Days to Produce a Copy of the “Summary Plan Description”
The majority of people under age 65 in the USA have their disability, health, and life insurance through group plans sponsored by their employers. For people that work for a company other than the government or a church, a federal law called ERISA – the Employee Retirement Income Security Act – spells out some limited guidelines that apply to these insurance plans (called “welfare benefits” in ERISA terms). One part of the law that can help employees (from the CEO down to the lowest paid person at the company) allows employees to get a copy of the employer’s group plan documents, called the Summary Plan Description. Not only do employers have to create a Summary Plan Description (also called an SPD), but ERISA requires that the plan’s administrator has to produce a copy of at least that document within 30 days of being asked for it. As ERISA Attorneys, we constantly get plan documents, but we want people to know that ERISA also includes a strong penalty – a fine of up to $110 per day after the 30th day – when documents are not produced.
How do you get a copy of the Summary Plan Description? This article explains how you ask for the SPD, and what to do to when the Plan documents are not produced within 30 days. Having a copy of the plan’s Summary is important, because ERISA and the federal regulations that apply to it contain very little about what benefits employers must offer and what terms they must include in their plans. In fact, employers are free to draft welfare benefit plans nearly any way they want to structure them, BUT the terms have to be laid down in writing in the SPD. Those terms – found in the Summary Plan Description – tell employees what benefits are available, and without a copy of the SPD, there is no way to know what the plan is required to pay for or in what circumstances you get a plan benefit. When the Plan Administrator does not produce the documents, it leaves employees in the dark, and that is where the $110 per day penalty can help you get the documents. If you cannot get the SPD, you can hire an ERISA Attorney to file a lawsuit to not only get the documents, but also to seek the monetary penalty of up to $110 for each day the administrator is in violation.
The Starting Point: Who Do You Request the Plan Documents From?
Before you need to worry about the penalty, you need to make sure you are asking the right person for the documents. The person or company that is responsible for giving you the Plan documents can vary depending on what part of the country you live in. Some courts require the employer to produce the documents. Other courts require whoever makes the plan decisions to produce the documents. And there are other courts which require the person or company named in the documents to be responsible…of course, you have no idea who that is until you get the document! So there is no single rule to determine who you contact to get the Summary Plan Description, but that does not mean you do nothing.
Instead, the solution is to request the documents from at least 2 places: your employer AND the insurance company that is running the plan. If there is another player involved (a third party administrator, a VP of Human Resources, etc.), you should also request the documents from that person or company too. If you ask for the documents from every possible person that could be responsible, you do not have to worry about leaving out the one that may have to pay the penalty if the documents are not produced.
How Do You Request the Plan Documents? Does the Request Have to Be In Writing?
Your request does not have to be in writing, but you cannot prove the day it was made unless you deliver it in writing by some service that has a tracking system. You should follow these rules when you send your request:
- Use multiple copies of one letter with addresses to EACH person or company to whom you are sending it listed on the first page.
- Send EACH of the people it is addressed to an original signed copy.
- Each person or company should get the letter delivered by FedEx, UPS, or Postal Service delivery with a tracking number AND signature required.
- You may send it by email too, but be sure to send a hard copy as described above.
- Specifically request that copies of the following be mailed to you:
- The Plan Document;
- The Summary Plan Description;
- Any other documents under which the plan is operated; and
- Any procedures or guidelines that apply to your specific claim that are not included in any of the documents listed above.
Do not rely on phone calls. Do not rely on email alone. ERISA, specifically 29 USC Section 1132(c), gives the administrator 30 days from the day your request is received to send you the documents. That means you might get them a little after the 30 days, but if you cannot prove the date they received your request, the 30-day time period is meaningless.
If you do not receive the documents within 30 days, we recommend that you send a follow-up letter to each of the people you sent your original letter as a “courtesy second request.” A judge will be more willing to award penalties when you are patient and polite. If you make a good faith effort to get the plan documents, it makes the administrator’s failure to provide them you stand out as a breach of fiduciary duty.
What Do You Do if The Administrator Will Not Give You a Copy of the Plan?
What if you cannot get the plan documents, even after you have sent a couple of written request? The ERISA law allows you to file a lawsuit 1) to get the plan documents, and 2) to seek a monetary penalty for the delay. Currently, the law allows a court to award a penalty anywhere from $0 to $110 per day for each day after the 30th day following your initial request. This type of lawsuit must be filed in U.S. District Court (federal court), and you certainly want to hire an experienced ERISA Attorney to file that lawsuit for you.
Who Do You Sue if You Cannot Get the Plan Documents?
Where you file a lawsuit may be part of the answer to this question. In some parts of the country, you must sue the employer. They are usually the named planned administrator for distributing documents. In other parts of the country, you may have to sue the person or company that is actually deciding claims, often an insurance company. Having a knowledgeable ERISA attorney will help you navigate this question.
Takeaway: If You Cannot Get Plan Documents After a Written Request, You Can File a Lawsuit and Possibly Recover a Penalty Along With Copies of the Plan Documents
Courts may award a penalty anywhere from $0 to $110 per day from the 31st day until the day you are provided plan documents. The law includes this penalty as a way to encourage plan administrators to provide copies of the Summary Plan Description when asked. If you ask and the administrator ignores or refuses your request, you may file a lawsuit to get those documents.