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A Service of OnQue Technologies, Inc. |
| Failure to Provide SPD Results in $17,000 Penalty |
December 12, 2002
Santa Rosa, CA |
Summary
An employer
was fined for repeatedly refusing to provide a Summary Plan Description (SPD)
to an employee whose disability benefits had been discontinued. The court
assessed $15 per day for 1165 days for a total penalty of $17,475, noting that
the employer acted in bad faith throughout the course of the
litigation.
Background: Terry Sunderlin sued her employer, ENI
Technology, for denial of disability benefits and for damages stemming from
ENI's failure to provide a proper Summary Plan Description. ENI responded to
Sunderlin's first request for a copy of the plan administrator's SPD by
returning her letter stating that that the person to whom it was addressed no
longer worked there. Sunderlin's second request yielded a copy of the
disability insurance policy. Subsequent requests were fruitless. Throughout the
trial ENI maintained that the insurance policy provided to Sunderlin by the
carrier constituted an SPD.
Ruling: The court
explained that ERISA requires the plan administrator, upon written request of
any participant or beneficiary, to provide a copy of the latest updated SPD.
This document must contain accurate and comprehensive information to inform
participants and beneficiaries of their rights and obligations under the
employer's benefits plan. It must be clearly written so as to be easily
understood by the average plan participant.
In this case, the insurance
policy furnished to Sunderlin did not constitute an SPD because it did not
contain the name of the plan, the name or address of the plan administrator, or
explain the procedure for addressing denial of claims. It was written in
technical jargon and contained erroneous and misleading information. Throughout
the trial, ENI characterized this policy as a "booklet" intended to be an
actual SPD. ENI also refused to admit that it was the plan
administrator.
NOTE: This case highlights the danger in relying solely on
documents prepared by the insurer. They may not comply with current ERISA
requirements for SPD content and may not be written in easily understood
language. Providing accurate and easily understood SPDs remains the ultimate
responsibility of the plan administrator.
For information on SPD
COBRA requirements, click here:
The DOL SPD & COBRA
Regs
(Sunderlin v. First Reliance Standard and ENI Technology, U.S.
District Court, Western District of New York, Dkt. No. 00-CV-6253, November 4,
2002) |
This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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Copyright © 2002 OnQue Technologies, Inc. All Rights Reserved.
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