Is it ever imprudent to get rid of a service provider that can't meet an information request?

[Peter Gulia]

The ERISA 408(b)(2) rule says that if a service provider has failed to furnish the required information, despite the responsibile plan fiduciary's follow-up efforts, and the missing information relates to future services, "the responsible plan fiduciary SHALL terminate the contract or arrangement as expeditiously as possible, consistent with [the fiduciary's] duty of prudence."

A service provider that can't or won't in more than four months' time answer this information request shows by its conduct at least that it doesn't care about following relevant law, and perhaps that it lacks competence or capability for the service that it's supposed to perform. In what circumstances would it somehow not be prudent for the plan fiduciary to get rid of such a weak service provider?

[mbozek]

The ERISA 408(b)(2) rule says that if a service provider has failed to furnish the required information, despite the responsibile plan fiduciary's follow-up efforts, and the missing information relates to future services, "the responsible plan fiduciary SHALL terminate the contract or arrangement as expeditiously as possible, consistent with [the fiduciary's] duty of prudence."

A service provider that can't or won't in more than four months' time answer this information request shows by its conduct at least that it doesn't care about following relevant law, and perhaps that it lacks competence or capability for the service that it's supposed to perform. In what circumstances would it somehow not be prudent for the plan fiduciary to get rid of such a weak service provider?

Catestrophic event such as a flood, tornado or act of terrorism which results in loss of data or delay in reconstructing the data beyond 4 months or terminating the contract would be more expenssive than waiting for the date to be reconstructed.

[Peter Gulia]

Thanks, Matt; that idea simply hadn't occurred to me.

So let me make the hypo a little harder. Assume that there is no explanation for the service provider's failure to furnish information (and that the responsible plan fiduciary is unaware of any circumstances that might explain why the service provider could not furnish information).

Could it ever be imprudent to fire a non-responsive service provider?