The previous two Units address the statutory purpose of 29 U.S.C. 1024(b)(4). As observed there, some notable distinctions emerged in the view of the courts as to what documents are â€œplan informationâ€ subject to the statute.
The Sixth Circuit can be described as giving the statute a broad reading as to what constitutes “plan information”, see Bartling v. Fruehauf Corp., 29 F.3d 1062, 1072 (6th Cir.1994), whereas the Second and Fourth Circuits have given the statute a more narrow construction. CWA/ITU Negotiated Pension Board of Trustees of the CWA/ITU Negotiated Pension Plan v. Weinstein, 107 F.3d 139 (2d. Cir. 1997); Faircloth v. Lundy Packing Co. 91 F.3d 648 (4th Cir. 1996); see also, Ames v. American Nat. Can Co.170 F.3d 751 (7th Cir. 1999). Beyond that, it was observed that the good faith or not of the administrator and the resulting prejudice, if any to the participant, influenced outcomes so that the results were not always uniform.
Of the elements constituting a proper claim for plan information, this Unit 3 will begin the discussion of the question of â€œWho is entitled to request the plan information and from whom?â€
The treatment of this issue will be taken up in three parts, as follows:
1. Who is a participant or beneficiary?
2. When may third parties advance statutory claims for participants or beneficiaries? and
3. Who are the proper parties to whom such requests must be directed?
Who is a participant or beneficiary?
As the statute reads, only participants or beneficiaries may request plan information subject to the disclosure requirement.
The statute defines these terms as follows:
(7) The term â€œparticipantâ€ means any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.(8) The term â€œbeneficiaryâ€ means a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.29 U.S.C. 1002 (7)(8)
The definitions belie the complexity that attends their application as will be seen below.
At what time is the definition applied?
The temporal aspect of the definition is important. The definition could be applied at the time of wrongdoing, or at the time suit is filed, or perhaps at some other time in between.
In Daniels v. Thomas & Betts Corp., 263 F.3d 66 (3rd Cir. 2001), for example, a widow sought relief against a plan fiduciary based on claims for death benefits. The Court noted that the damages, if any, would be payable by the fiduciary, not the plan. Thus, the question, was the widow an ERISA beneficiary at all?
The court answered affirmatively, stating:
We conclude, however, that ERISA beneficiary status should not be measured as of the time of the present appeal. Instead, the temporal focus of the “beneficiary” inquiry should be the time the request for plan documents was made. An individual who “is … entitled” to a plan benefit or who “may become entitled” to such a benefit, as of the time that individual makes the request of the plan administrator, thus constitutes a “beneficiary.”
Applying this definition, the Third Circuit in Gorini v. AMP Inc., 94 Fed.Appx. 913 (3rd Cir. 2004), held that a terminated employee still constituted a participant in a severance plan for purposes of the disclosure requirement. The Court stated:
Tyco tries to claim that Gorini was never qualified for participation in the 1991 severance plan because the only people eligible for benefits under it were â€œregular, full-time, salaried employees,â€ and Gorini made his request for severance benefits after Tyco sent a letter notifying him that his employment was terminated. Tyco’s position if adopted, would mean that only current employees could draw on severance plan benefits. That is inconsistent with the very concept of severance benefits.
On the other hand, in Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.1986), noted in Daniels v. Thomas & Betts, the Ninth Circuit held that former employees whose vested benefits under the plan had already been distributed were not â€œeligible to receive a benefit,â€ and were not likely to become eligible to receive a benefit, at the time that they filed the suit. Therefore, they were not plan participants entitled to disclosure of plan information.
The Kuntz Court stated:
“The … plaintiffs do not allege that their vested benefits were improperly computed, rather they allege breach of fiduciary duty or of a duty to disclose information about benefits, thus any recoverable damages would not be benefits from the plan.
Kuntz was abrogated by Kayes v. Pacific Lumber Co., 51 F.3d 1449 (9th Cir. 1995) based upon the Pension Annuitants Protection Act of 1994 (“PAPA”), Pub.L. No. 103-401 (Oct. 22, 1994), amendments to ERISA Â§ 502(a), 29 U.S.C. Â§ 1132(a) (clarifying that former participants or beneficiaries of terminated pension plans have standing to seek relief). Thus, the significance of Kuntz is left in doubt.
Nonetheless, the issues raised in Kuntz have survived in a broader debate. As noted by the district court in In re AEP Erisa Litigation, 437 F.Supp.2d 750 (S.D.Ohio)(2006), the Circuits have divided on the issue of when a former participant has standing. The district court contrasted the First, Second, Fifth, Sixth and Eighth Circuits as taking a broader view of participant status than the Fourth, Tenth and Eleventh Circuits.
(The court compared Vartanian v. Monsanto Co., 14 F.3d 697, 702-03 (1st Cir.1994); Mullins v. Pfizer, Inc., 23 F.3d 663, 667-68 (2d Cir.1994); Christopher v. Mobil Oil Corp., 950 F.2d 1209, 1220-21 (5th Cir.1992); Swinney v. Gen. Motors Corp., 46 F.3d 512, 518 (6th Cir.1995); Adamson v. Armco, Inc., 44 F.3d 650, 654-55 (8th Cir.1995) with the outcomes in Stanton v. Gulf Oil Corp., 792 F.2d 432, 433 (4th Cir.1986); Raymond v. Mobil Oil Corp., 983 F.2d 1528, 1535 (10th Cir.1993);and Sanson v. Gen. Motors Corp., 966 F.2d 618, 619 (11th Cir.1992).)
Thus, the determination of participant or beneficiary status can be nuanced as the foregoing discussion illustrates. In fact, the decisions on standing are often intermixed with (or determined by) conclusions as to the merits of the claims.
“Colorable Claim To Benefits”
In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the United States Supreme Court set a boundary on the concept of participants and beneficiaries that is often used as a touchstone in evaluating the status of a participant or beneficiary under a plan. The Court stated:
Congress did not say that all â€œclaimantsâ€ could receive information about benefit plans. To say that a â€œparticipantâ€ is any person who claims to be one begs the question of who is a â€œparticipantâ€ and renders the definition set forth in Â§ 1002(7) superfluous . . . In our view, the term â€œparticipantâ€ is naturally read to mean either â€œemployees in, or reasonably expected to be in, currently covered employment,â€ Saladino v. I.L.G.W.U. National Retirement Fund, 754 F.2d 473, 476 (CA2 1985), or former employees who â€œhave . . . a reasonable expectation of returning to covered employmentâ€ or who have â€œa colorable claimâ€ to vested benefits, Kuntz v. Reese, 785 F.2d 1410, 1411 (CA9) (per curiam), cert. denied, 479 U.S. 916, 107 S.Ct. 318, 93 L.Ed.2d 291 (1986). In order to establish that he or she â€œmay become eligibleâ€ for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future.
The Third Circuit applied this boundary in Daniels v. Thomas & Betts Corp, stating, â€œ[w]e have said that “the concept of a colorable claim necessarily encompasses situations in which the requester has a reasonable basis for believing that he or she has a meritorious claim but is in fact mistaken.”
Thus, in Mead v. Intermec Techs. Corp., 271 F.3d 715, 717 (8th Cir.2001), where each claim for short-term disability benefits was dismissed on summary judgment, plaintiff was held not to be a plan participant because he had no colorable claim for benefits. See, also, Johnson v. Buckley, 356 F.3d 1067 (9th Cir. 2004) (employees’ claims fail as they were permanently terminated and not temporarily laid off and thus had no colorable claim for benefits).
On the other hand, the Seventh Circuit has stated that the requirement of a colorable claim â€œis not a stringent one.â€ The Court observed that:
A plaintiff achieves status as a beneficiary if they have even an â€œarguableâ€ claim; â€œ[o]nly if the language of the plan is so clear that any claim as an assignee must be frivolous is jurisdiction lacking.â€ Kennedy, 924 F.2d at 700; see also Panaras, 74 F.3d at 790. Even in cases where a plaintiff’s claim ultimately failed, the â€œpossibilityâ€ of success was sufficient to establish participant or beneficiary status. Kennedy, 924 F.2d at 701; see also Jackson v. E.J. Brach Corp., 176 F.3d 971, 979 (7th Cir.1999); Riordan, 128 F.3d at 552; Panaras, 74 F.3d at 790. A determination regarding the relative strength of that claim has often been deemed to go to the merits, not to whether standing as a participant or beneficiary was demonstrated. See Riordan, 128 F.3d at 552; Kennedy, 924 F.2d at 701.
Only participants and beneficiaries are entitled to plan information under the statute, but in the event of separation of employment, the question can be more challenging that it first appears. In many cases, such as those involving retirement benefits, severance benefits, disability benefits, retiree or continuation health coverage, and so forth, the issue of standing will be a first consideration.
In that regard, a review of the prevailing law on the issue of standing is essential. The list of cases set forth above from In re AEP Erisa Litigation, 437 F.Supp.2d 750 (S.D.Ohio) (2006) is representative of the varying points of view.
The next Unit in this series will address the question of when third parties may advance requests for benefits. This issue arises, for example, when a participant’s attorney, rather than the participant, makes the request. After a discussion of that issue, a suggested format for such requests will be offered for consideration.