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:: ERISA Plan Information Requests (Unit 5): Who Is Entitled To Request Plan Information?

This article contains another unit in a series on plan information requests under 29 U.S.C. 1024(b)(4).

Having addressed what plan information is subject to the statute (“Statutory Purpose And Scope”) in Units 1 and 2, we began in Unit 3 a discussion of the question who can request plan information (“Who Is Entitled To Request Plan Information”). This issue seemed best addressed in three parts.

The three subtopics were as follows:

1. Who is a participant or beneficiary? (Unit 3)
2. When may third parties advance statutory claims for participants or beneficiaries? (Unit 4) and
3. Who are the proper parties to whom such requests must be directed?

It is this last question that will concern be taken up in this Unit 5.

By way of background, the statute reads:

The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.

So here we take up the issue of who is an “administrator” for purposes of the request. Since ERISA provides a definition of the term “administrator” the issue would appear rather straightforward. The definition is as follows:

The term “administrator” means:
(i) the person specifically so designated by the terms of the instrument under which the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or
(iii) in the case of a plan for which an administrator is not designated and a plan sponsor cannot be identified, such other person as the Secretary may by regulation prescribe.

29 U.S.C. 1002 Section 16(A)

As it turns out, however, the determination of who is the administrator can be one of the most tedious of all on this topic. Moreover, the consequences of an error here can make the difference in winning and losing a statutory penalty case. For example, in Hiney Printing.Hiney Printing Co. v. Brantner, 243 F.3d 956 (6th Cir. 2001), the Court stated:

The law in this Circuit is clear that “[o]nly a plan administrator can be held liable under section 1132(c).” VanderKlok v. Provident Life & Accident Insurance Co., 956 F.2d 610, 617 (6th Cir.1992). It is undisputed that the Master Plan Document defines Hiney Printing as the plan administrator, and that Brantner, through counsel, directed her request for plan information to Administrative Service Consultants and Subro Audit, rather than Hiney Printing.

Thus, in that case the Sixth Circuit affirmed the district court’s decision against the plan participant on statutory penalty claims..

As will be seen below, the issue is susceptible to a practical solution. For now, however, an examination of the statutory language reveals the following rules in determining the identify of the “administrator”:

Rule # 1: The administrator is the person or entity identified in the plan documents. [29 U.S.C. 1002 Section 16(A)(i)]

Many documents will identify the plan administrator and the query may end there. On the other hand, if none is so identified, two default rules are supplied in cascading fashion, as follows:

Rule #2: If Rule #1 does not apply, the “plan sponsor” is the “administrator” for purposes of the statute. [29 U.S.C. 1002 Section 16(A)(ii)]

Once again, ERISA defines the term. The statute defines “plan sponsor” as:

(i) the employer in the case of an employee benefit plan established or maintained by a single employer, (ii) the employee organization in the case of a plan established or maintained by an employee organization, or (iii) in the case of a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan.

29 U.S.C. 1002 Section 16(B)

Rule #3: If neither Rule #1 nor Rule #2 apply, the administrator is “such other person as the Secretary may by regulation prescribe.” [U.S.C. 1002 Section 16(A)(ii)]

Normally a plan document or summary plan description will identify the plan administrator or at least the plan sponsor or employer. Further, the plan sponsor should normally not be difficult to identify under the broad definition supplied above (but see the note below). For this reason, Rule #3 is not useful and only cited in the caselaw in the context of a statutory quotation.

Caselaw Supplement To Statutory Rules: “De Facto Administrator” Status

In some jurisdictions, one may find yet another rule based upon caselaw. As observed by the Eighth Circuit, the Seventh Circuit Court of Appeals noticed a split in the circuit courts of appeals as to whether some party other than the one designated in the plan instrument can be a “ de facto ” administrator of the plan. See Jones v. UOP, 16 F.3d 141, 145 (7th Cir.1994). The Seventh Circuit stated:

The First Circuit, and possibly the Fifth and Eleventh, are willing to deem nonadministrators “de facto” plan administrators; the other circuits (except the Third and the Eighth, which have not been heard from on this issue) are not. Compare Law v. Ernst & Young, 956 F.2d 364, 373-74 (1st Cir.1992); Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1077 (5th Cir.1990), and Rosen v. TRW, Inc., 979 F.2d 191 (11th Cir.1992), with Anweiler v. American Electric Power Service Corp., 3 F.3d 986, 994 and n. 5 (7th Cir.1993); Lee v. Burkhart, 991 F.2d 1004, 1010 n. 5 (2d Cir.1993); McKinsey v. Sentry Ins., 986 F.2d 401, 403-05 (10th Cir.1993); Coleman v. Nationwide Life Ins. Co., [969 F.2d 54, 62 (4th Cir.1992), cert. denied, 506 U.S. 1081, 113 S.Ct. 1051, 122 L.Ed.2d 359 (1993) ]; VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 617-18 (6th Cir.1992); Moran v. Aetna Life Ins. Co., [872 F.2d 296, 298-99 (9th Cir.1989) ]; Davis v. Liberty Mutual Ins. Co., 871 F.2d 1134, 1138 (D.C.Cir.1989).

For purposes of comparison in this context, see Hunt v. Hawthorne Assocs., Inc., 119 F.3d 888, 914-15 (11th Cir.1997); Crocco v. Xerox Corp., 137 F.3d 105, 106-08 (2d Cir.1998) (not allowing finding of “de facto” administrator); contra, Rosen v. TRW, Inc., 979 F.2d 191, 193-94 (11th Cir.1992). (“if the employer is administering the plan, then it can be held liable for ERISA violations . . . [P]roof of who is the plan administrator may come from the plan document, but can also come from the factual circumstances surrounding the administration of the plan, even if these factual circumstances contradict the designation in the plan document.”) See also, Sentara Virginia Beach General Hosp. v. LeBeau, 182 F.Supp.2d 518 (E.D.Va.2002).

The reasoning of the Eleventh Circuit in Rosen derives from a concern that a textual reading of the statute would lead to an elevation of form over substance. (The court’s rejection of a textual approach is signaled by the approval of the opinion in Law v. Ernst & Young, 956 F.2d 364, 373-74 (1st Cir.1992) in which Rosen court stated that the de facto administrator rule “was consistent with Congress’s intent to give employees a remedy when they are denied information about their ERISA benefits.” ) In this connection, the Eleventh Circuit stated:

Some older cases hold that the company is not a proper defendant in an ERISA case solely because the plan instrument designates a plan administrator. See Higman v. Amsted Industries Inc., 2 Employee Benefits Cas., (BNA) 1948, 1949 (E.D.Pa.1981); Barnett v. Thorofare Markets, Inc., 452 F.Supp. 880, 884 (W.D.Pa.1978). We disagree with these opinions because they elevate form over substance. If the company is acting as a plan administrator, then it should be held liable for such conduct regardless of a sham designation in the plan document.

Rosen v. TRW, Inc., 979 F.2d 191, 193 n.1

The Eleventh Circuit reviewed the findings in the Law opinion which it deemed indicative of de facto administrator status and, from this one may gain some insight as to the indicia which courts may view as determinative on the issue. The court stated:

[T]Law court noted that there was “ample evidence” from which the district court could conclude that the employer controlled the administration of the plan. Id. The plan document provided for company control over the appointment and continued service of the members of the committee. The company agreed to purchase insurance or indemnify the committee members for claims arising out of their duties as administrators. Id. Most importantly, the court focused on the fact that the company had not taken action to establish the separation of the committee from the company. The plaintiff’s requests were answered by company employees using company stationery. From these letters, the district court could conclude that the company was controlling the flow of information and acting as the de facto plan administrator. Id. at 374. See also Jansen v. Greyhound, 692 F.Supp. 1022, 1025 (N.D.Iowa 1986) (company denied summary judgment because of sufficient factual issues concerning which entity is the plan administrator; letters regarding retirement benefits were sent on defendant’s stationery); Foulke v. Bethlehem 1980 Salaried Pension Plan, 565 F.Supp. 882, 883 (E.D.Pa.1983) (company was denied summary judgment because letter discussing changes to the plan was written on company stationery).

Rosen, 979 F.2d 191, 193 (emphasis added)

Further, the rule served to prevent an evasion of responsibility by the company through setting up a committee or other entity which was ultimately not responsible under the statute. The court opined:

If the court were to hold that an entity not named in the plan document could not be held liable, then the employee would be denied redress. The company which held itself out to be the plan administrator would be immune from suit because a committee had been named in the plan documents. The committee also would be immune from suit because the employee would have failed to request information from the committee as company employees had assumed responsibility for answering such requests. Without a formal request being made to the committee, it could not be held liable and the employee would have no redress for his grievance.

To the extent employers provide benefits professional employer organizations, leasing and staffing companies, multiple employer welfare plans and the like, the issues raised in Rosen and the opposing cases will likely gain more attention in the context of plan information requests.

An Overview

In many cases, the documents will simply identify the employer as the plan administrator. In Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065 U.S.Iowa,1996, for example, Varity Corp “was both an employer and the benefit plan’s administrator, as ERISA permits.” (noting a comparision between ERISA § 3(16) (employer is, in some circumstances, the default plan administrator) and NLRB v. Amax Coal Co., 453 U.S. 322, 329-330, 101 S.Ct. 2789, 2794-2795, 69 L.Ed.2d 672 (1981) (common law of trusts prohibits fiduciaries from holding positions that create conflict of interest with trust beneficiaries); Bogert & Bogert, supra, § 543, at 218, 264 (same).

In other cases, the document may specify some other entity, such as an insurance company. See, e.g., Benesowitz v. Metropolitan Life Ins. Co., — F.3d —-, 2006 WL 3682747 C.A.2 (N.Y.),2006. (“The court first determined that MetLife was entitled to the deferential arbitrary-and-capricious standard of review because the Plan’s summary description delegated discretionary authority to the plan administrator and the plan provision was not ambiguous”) This will often be the case with disability plans.

Unfortunately, in some cases, nonetheless, the issue will be complicated and have to be sorted out by evidentiary proceedings. In Wachtel ex rel. Jesse v. Guardian Life Ins. Co. of America 453 F.3d 179 (3rd Cir. 2006) , for example, the Third Circuit noted :

[f]or the purpose of class action certification, Plaintiffs allege that Health Net, Inc. is a fiduciary and plan “administrator” under the Employee Retirement Income Security Act (“ERISA”). Whether Health Net Inc. qualifies as an “administrator” under ERISA for trial purposes will be litigated in the District Court through further pre-trial motions.

Who Bears The Burden of Mistakes Due To Complexity?

No doubt it is in fact an imperfect world, and the consequences of complexity may be visited on occasion on those who have no control over the matter. One requesting plan information should not assume the court will undertake to resolve the issue. For example, in Arber v. Equitable Beneficial Life Ins. Co., 848 F.Supp. 1204 (E.D.Pa.1994), the court opined:

In this case and as the Plaintiffs themselves acknowledge in their brief in opposition to the instant motion, the complaint is completely silent as to the issue of who is the “administrator” of the benefit plan at issue and we again note that neither party has provided the Court with a copy of the said plan. Accordingly, it is impossible to make a determination one way or the other as to the identity of the plan’s administrator and we therefore have no alternative but to dismiss Count VI for failure to state a claim . . .

The plan participant should assume that the burden lies on him or her to properly identify the administrator, not only in the request, but also in any complaints based upon such requests.

Claims Administrators and Plan Administrators

Matters can be further complicated by confusion over terms such as “claims administrator” and “plan administrator”. The typical function of each can be illustrated by a simple fact pattern as follows:

As Plan administrator, Crossmark delegated claim administration to a third party claims administrator, which was empowered to make benefit determinations. Over the course of Murray’s participation in the Plan, at least two claims administrators were named by Crossmark. In 1997, Defendant-Appellee Group & Pension Administrators, Inc. (“GPA”) became the claims administrator. Then, on March 29, 2000, Murray enrolled her husband, Mr. Hugh Murray, as a dependent beneficiary in the Plan. Mr. Murray was self-employed as a pest control contractor at that time. On March 1, 2001, Crossmark replaced GPA with Defendant-Appellee Connecticut General Life Insurance Company (“CIGNA”) as claims administrator.

Murray v. Crossmark Sales, Inc. 163 Fed.Appx. 339, (5th Cir. 2006)

Of course, the statute does not specify “plan administrator”, but rather simply refers to the “administrator”. May a claims administrator be held accountable under the statute? At least one court has said they can. Consider the following:

Prudential disputes Judge Lynch’s reliance on “[a]ny administrator” as contained within 29 U.S.C. § 1132(c)(1) (2006). Judge Lynch concluded that this meant that either a claims administrator, such as Prudential, or a plan administrator is subject to penalty under the statute for failure to provide requested information. Prudential contends that Judge Lynch has inappropriately broadened the scope of the statute.

Prudential cites Davis v. Michigan, 489 U.S. 803, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989) to argue that courts must read statutes in the overall statutory scheme. In this light it is helpful to review the other subsections of § 1132(c). § 1132(c)(2), which addresses penalties for failure to provide an annual report, spells out that “any plan administrator” who fails to meet this requirement is subject to penalty. Other subsections of § 1132(c) also specifically address penalties applicable to “plan administrators.” The Court finds that the term “[a]ny administrator” in § 1132(c)(1) was intentional and in stark contrast to the other subsections that address penalties to “plan administrators.” Judge Lynch appropriately interpreted the term to cover both claims and plan administrators.

Younkin v. Prudential Ins. Co. of America, Slip Copy, 2006 WL 2524214 (D.Mont. 2006)

This may be just another way of attaching liability to a de facto administrator as several courts have done as, for example, in Law v. Ernst & Young, 956 F.2d 364, 373-74 (1st Cir.1992) (see above). On the other hand, it appears on its face to present a distinct approach to expanding the entities liable under Section 1024(b)(4) based upon a textual reading of the statutory definitions. For this reason, it should be treated separately from a conceptual standpoint.

Practice Pointers

Given the nuances of the foregoing, the question of who is the administrator for purposes of a plan information request can obviously become complex. One will often find among insurance companies a practice of relying upon a combination of documents no one of which is described as a “plan document”. Some practical rules will assist in making the issue more manageable. The following checklist is offered as a guide.

1. Direct requests to multiple parties, including the plan sponsor, any benefits committees and the claims administrator.

2. Revise requests to include any additional parties identified by responses to the first request.

3. Identify plan sponsors by reference to Form 5500 filings (including schedules) as well as plan documents, insurancy policies and administration contracts.

4. Describe the function of the entities in a claim for statutory penalties and attach a copy of any supporting documents to the complaint.

5. On the other side of the issue, claims administrators should define their responsibility carefully and consider the possibility of a functional determination as to administrator status regardless of technical titles. In this connection, it should be assumed that courts will not look with favor on lack of cooperation in identifying the administrator. For example, consider the following excerpt:

We are compelled to note that we are bewildered by Glidden’s actions with respect to Murphy’s requests for pension benefits information . . . [A]after informing Murphy by letter that she would receive pension benefits information, Glidden did not provide that information and continued to fail to provide it throughout eleven months of telephonic requests by Murphy and then after a written request by her attorney. If the reason for this refusal was that Murphy was mis-directing her requests for pension information to Glidden rather than to the Pension Committee, we are confounded by Glidden’s failure to simply point out Murphy’s mistake to her. Likewise, if the reason for this refusal was that Murphy herself was required to request the information in writing, we cannot understand why Glidden did not so instruct her. In short, Glidden’s evasive and disingenuous behavior with respect to a former employee’s attempts to exercise her ERISA rights is incomprehensible.

Minadeo v. ICI Paints, 398 F.3d 751 (6th Cir. 2005.)

Note: The issue of who is the administrator may lead to a question of who is the employer under the controlled group rules as was the case in Minadeo. See, 26 U.S.C. Section 1563(a) (via 29 U.S.C. Section 1301(b), the consanguineous set of definitions complementing 29 U.S.C. 1002); see also, Rule #2 above, “administrator” is “plan sponsor” which is in turn defined as “the employer”. This highly intricate set of attribution and affiliation rules are beyond the scope of this article, but thoroughly discussed in a “Who Is the Employer” series by S. Derrin Watson, Esq. on BenefitsLink. Despite the general effectiveness of the practice pointers set forth above, the complexity presented in discerning the relationships among affiliated companies (and outsourcing companies) still pose substantial risk to the effective use of the disclosure mandate of Section 1024(b)(4).

Further, it is conceivable that agency status may in some cases either support or militate against a decision that the proper party had proper notice of a request depending on the grant or limitations of authority. Again, this issue lies beyond what may be covered in the space of this discussion, but is noteworthy when approaching the issue from a research standpoint.

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