We see plaintiffs asserting an ERISA claim for statutory penalties more frequently now.

These claims seek statutory penalties (up to $110 per day), alleging the plan administrator “fail[ed] or refus[ed] to comply with a request for information” by the beneficiary. 29 U.S.C. 1332(c)(1).

How easy is it for plaintiffs to win a statutory penalty claim for failing to provide information? Not all that easy.

Here’s the case of Smiley v. Hartford Life and Accident Insurance Company, Smile Brands, Inc. et al, __ Fed. Appx. __, 2015 WL 4385673 (11th Cir. July 17, 2015) (Kudos for some nice work by my friends Elizabeth Bondurant and Russ Buhite).

FACTS: Smiley requested and received relevant ERISA Plan documents from plan administrator Smile Brands. After Smiley’s ERISA benefits were terminated, she again requested plan documents. This time, however, she made the request to claims administrator Hartford. Hartford provided Smiley with an outdated address (contained in the Plan documents) for the plan administrator. Smiley then sent a second request for plan documents to the outdated address. The letter was returned as “undeliverable.”

11th CIRCUIT HELD: Statutory Penalty Claim Properly Dismissed.

  1. ERISA authorizes the imposition of a daily penalty upon a 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.” 19 U.S.C. 1332(c)(1).  Op. at 2.
  2. A plan administrator is either “the person specifically so designated” in Plan documents, or a company acting as a plan administrator. Op. at 2-3.
  3. Hartford was not the plan administrator and therefore not subject to statutory penalties. Op. at 3.
  4. Hartford also was not a “de facto administrator[.]” “We have consistently rejected the use of de facto plan administrator doctrine ‘where a plaintiff has sought to hold a third-party administrative services provider liable, rather than the employer….’” Op. at 3.
  5. Statutory penalties should not be awarded here because the plan administrator, Smile Brands, “did not refuse or fail to provide Smiley with the Plan documents.” Smile Brands “had no knowledge that Smiley was attempting to obtain the same Plan documents until it was served with Smiley’s amended complaint….” Op. at 4.
  6. Smiley failed to show any prejudice in denying disclosure of the requested documents. “Although a plaintiff need not demonstrate [prejudice] to obtain [statutory penalties], a court may consider those factors, among others, in making its determination.” Op. at 4-5.

KEY TAKE AWAY: The circuits are not consistent in how they approach the statutory penalty claim. Surveys suggest that the $110 per day penalty is rarely if ever given, and awards (if they occur) typically range from ten to fifty dollars per day, with an average of about $33 per day.

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Photo of Mike Reilly Mike Reilly

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment…

Mike Reilly is a nationally recognized labor, employment and employee benefits attorney, named one of the “Top 100 Most Powerful Employment Attorneys in the Nation” for the past five consecutive years by Human Resource Executive®. He has decades of experience providing strategic employment advice, and has represented clients in more than 75 jury trials, arbitrations, bench trials and claims before the EEOC and Washington State Human Rights Commission.

Small and large employers retain Mike for his strategic advice and decades of experience in employment issues and litigation, business decisions and litigation avoidance. Mike provides advice in claims involving discrimination, retaliation, wrongful discharge, disability accommodation, ERISA and non-ERISA employee benefit claims, and wage/hour claims. He served as lead counsel in an employee raiding/trade secret case as reported in the Wall Street Journal, and defends employers in class action claims.

Mike’s remarks on employment issues have been quoted in NewsweekCorporate Legal TimesSeattle TimesEmployee Relations Law JournalPuget Sound Business JournalCFO.com, and other professional journals and management publications. Chambers USA’s Guide to America’s Leading Lawyers for Businessrates Mike in the top ranking (band one) for his work in labor and employment law, and has described him as “one of Seattle’s top-rate attorneys” who is “truly phenomenal [with] superb legal instincts” and “an amazingly assertive litigator.” His clients include Nordstrom, Seattle Seahawks, Home Depot, KeyBank, Starbucks, Fred Hutchinson Cancer Research Center, Red Robin and Seattle Chamber of Commerce, among others.