ERISA-Eleventh Circuit Rules Against Imposition Of Statutory Penalty Under ERISA For Failure To Furnish Documents

In Smiley v. Hartford Life and Accident Insurance Company, No. 15-10056 (11th Cir. 2015) (Unpublished Opinion), the Eleventh Circuit Court of Appeals (the “Court”) reviewed the issue of whether a statutory penalty should be imposed under ERISA for the failure to furnish plan documents. The district court decided that the penalty should not be imposed, and the Court must review this decision for abuse of discretion.

The Court noted that ERISA authorizes district courts to impose a daily penalty upon any plan administrator that “fails or refuses to comply with a request for information which such administrator is required . . . to supply to a participant or a beneficiary.” 29 U.S.C. § 1332(c)(1). Specifically, ERISA requires a plan administrator to furnish the following upon request: “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 and operated.” 29 U.S.C. § 1024(b)(4). A plan administrator is either “the person specifically so designated by the terms of the instrument under which the plan is operated,” 29 U.S.C. § 1002(16)(A)(i), or a company acting as a plan administrator.

In this case, the Court continued, the district court correctly concluded that defendant Hartford Life and Accident Insurance Company(” Hartford”), a third-party claims administrator, was not the plan administrator and therefore not subject to statutory penalties under § 1132(c)(1). The applicable plan expressly identified defendant Smile Brands, Inc. (“Smile Brands”), the employer, as the plan administrator. Further, Hartford was not the de facto administrator. The record demonstrates that Smile Brands retained the authority under the plan to make final decisions on appeal from the claims administrator, Hartford. Thus, Hartford was not the plan administrator, either in name or in fact, and was not liable for failing to furnish any plan documents.

Further, the Court continued, the district court did not abuse its discretion in refusing to impose statutory penalties on Smile Brands. The disclosure penalty provision of § 1132(c) “is meant to be in the nature of punitive damages, designed more for the purpose of punishing the violator than compensating the participant or beneficiary.” As the district court concluded, the facts of this case do not warrant punishing Smile Brands because it did not refuse or fail to provide the plaintiff with any documents. There is no evidence that Smile Brands refused or failed to provide the plaintiff with the relevant documents, which were already in her possession. Given these facts, the Court could not say that the district court abused its discretion in denying disclosure penalties.

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