ERISA-District Court Imposes A Penalty of $37,510 For Failure To Provide SPD Upon Request

In Latimer v. Washington Gas Light Company, No. 1:11 cv 571 (GBL/TRJ) (E.D. Va. June 6, 2012), one issue before the Court was whether it should impose a penalty under ERISA upon the plan administrator for the failure to provide a summary plan description (an “SPD”) on request.

In this case, the plaintiff, Leron Patrice Latimer (“Latimer”), was employed by Washington Gas Light Company (“WGL”) from September 1992 until her retirement in October 2008. As a WGL employee, Latimer was a participant in, among others, a life insurance plan (the “Life Insurance Plan”), which was sponsored and maintained by WGL, and (to simplify the case) for which WGL was the plan administrator. Latimer sent letters to WGL on July 16, 2009 and December 8, 2009, requesting the SPD for the Life Insurance Plan. WGL failed to respond to these requests. On April 12, 2010, Latimer’s attorney sent a letter to WGL demanding, among other things, disclosure of the requested life insurance information. WGL responded by sending Latimer life insurance plan documentation via email on April 15, 2010. The question for the Court: Should a penalty be imposed on WGL due to its failure to promptly send the Life Insurance Plan’s SPD to Latimer?

In analyzing the case, the Court noted that section 104(b) of ERISA requires a plan administrator to provide a copy of the latest updated SPD to a participant within 90 days of becoming a participant and upon written request from the participant. Section 502(c)(1) of ERISA allows a court to impose a penalty of up to $110 a day on a plan administrator who fails or refuses to provide the SPD within 30 days of the request. Further, under section 502(c)(1), each failure or refusal to comply with a request for any information is to be treated as a separate violation. To be awarded the statutory penalty for a violation, a plaintiff need only show that the plan administrator did not comply with the statute. The amount of the penalty to be imposed, if any, is left to the discretion of the court. Two factors generally guide the court’s discretion here: prejudice to the plaintiff and the nature of the plan administrator’s conduct in responding to the participant’s request. Harms such as frustration, trouble, and expense, including the trouble and expense of engaging an attorney to induce the defendant’s compliance, are treated as being a prejudice to the plaintiff for this purpose.

As to the life insurance SPD, the Court said that there is no genuine issue of material fact concerning WGL’s violation of ERISA section 104(b) with respect to Latimer’s requests for the SPD. The Court said that the lack of any excuse for WGL’s failure to comply with section 104 and the prejudice to Latimer-consisting of the frustration, trouble, and expense suffered by Latimer in seeking WGL’s compliance- warrant the maximum penalty in this case. This maximum penalty is $110 per day from the dates a response was due for each of the letters sent to WGL in 2009. WGL’s failure to respond to each letter is treated as a separate violation. WGL did not provide responsive documents to written requests made on July 19, 2009, and December 8, 2009, until April 15, 2010. WGL’s response to Latimer’s July 19, 2009, request was due on August 15, 2009, and was delayed beyond the 30-day period by 243 days. See section 502(c)(1) (providing 30-day period in which plan administrator may respond to requests in compliance with ERISA). WGLs’ response to Latimer’s December 8, 2009, request was due on January 7, 2010, and was delayed by 98 days. Thus, the Court entered judgment in favor of Latimer and imposed a total penalty in the amount of $37,510, $110 per day for 341 days, against WGL.

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