$110 per day fine against administrator failing to follow claim proced

[Guest kurt johansen]

has anyone seen any cases where the plaintiff has tried to recover the $110 per day penalty under ERISA sec. 502©(1) based on the plan administrator's failure to supply information regarding the reason a claim was rejected?

I have a situation where the owner of a small company has decided he doesn't like my client and therefore, is not going to pay out his benefit under his 401(k) plan and won't even return phone calls. The owner/president/trustee is blatantly violating his fiduciary duties and I know we can take him to court and probably get attorney's fees. I would like to get more based on his behavior and I think a judge would agree.

502©(1) provides such a penalty where a plan administrator fails to provide information required under Title I of ERISA. ERISA 503 requires the plan to provide a written explanation setting forth the specific reasons why a claim is denied within 60 days of receiving the claim. That sounds like information required to be furnished under Title I of ERISA to me. I know that generally 502©(1) has been applied for failure to provide SPD, plan document, or annual report upon written request, but I think it could be interpreted more broadly. Does anyone know of any caselaw out there against me?

Kurt

[Kirk Maldonado]

There are probably 100 court decisions on point.

[Guest kurt johansen]

I assume you mean 100 cases against applying the $110 penalty where the only failure to provide information is a failure to provide a response to a claim for benefits. I couldn't find any case on point on Lexis after a brief search. If you have one at your fingertips, I would appreciate a cite. I can go from there.

Kurt

[Guest MDGrabhorn]

The cases are available where the penalty under 502©(1) have been applied. However, you must understand the key words in 502©(1) are "may" and "up to". It is entirely at the discretion of the court.

As for your reference to 503 and failure to provide the basis for a denial of benefits, based on my experience, this has not been a basis for a 502©(1) penalty.

The court's have consistently required a request for information under 104(B)(4) or 105(a), before applying a 502©(1) penalty.

Also, as you indicated a desire to punish the employer, realize that the Supreme Court has gutted ERISA (blaming it on Congress) by not allowing punitive (extra-contractual) damages.

That said, make sure you have made a formal request under 104(B)(4) and let the clock run. Repeat and repeat. This should help you in your quest for the 502©(1) penalties.

It would also be a good idea to review your Circuit for its application of penalties, as each one is a bit different.

Good luck to you.

***Note: This post is not provided as legal advice. Anyone reading this post relies on its contents at their own risk.

[Guest shafter]

Why not just have the participant contact the Department of Labor. Just read any of their press releases and you will know they are helping real people with real problems. Sarcasm aside, as a TPA, we have had requests from the DOL as to why distributions were not timely.

[GBurns]

All the cases, like this, that I have seen were settled by the local DOL PWBA office. As pointed out you do have to make the formal written, return receipt requested etc, claim and request for explanation of denial and appeal etc, then let the clock run out. This can all be done under the eye of the PWBA. In my experience they can be very effective. In one case they instigated an IRS request for plan info and a state unemployment audit.

If there is eventual civil court action they would be your best witness.