:: Requests For ERISA Plan Information: Claims Administrator Held Not Subject To Penalties

August 15, 2007 · Posted in 502(A)(1)(B) CLAIM FOR BENEFITS, DISCLOSURE, ERISA 

Plaintiff does not provide evidence that either CGLIC or Cigna are named as administrators under the plan, nor does she contend that either are plan sponsors. Therefore, they are not liable under ERISA for failure to provide documents. Moran, 872 F.2d 296; see also Rodriguez, 2004 U.S. Dist. LEXIS 18485 (holding that “an entity which only de facto operates as an administrator cannot be held liable as the administrator” under ERISA for failure to provide documents). King v. Cigna Corp., Slip Copy, 2007 WL 2288117 (N.D.Cal.) (Aug 07, 2007)

As previously noted, plan information requests must be directed to the correct party for the obligations under 29 U.S.C. § 1024(b)(4) to apply. This question may not be a simple one:

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

King v. Cigna Corp. provides another example of this requirement in actual practice.

The Facts

King v. Cigna Corp. involved a claim for benefits under a long term disability plan. These claims were advanced under 29 U.S.C. Section 1132(a)(1)(B). The plaintiff prevailed on this claim, but the court noted that the plaintiff was not entitled to benefits from CIGNA, stating:

. . . after reviewing all of the evidence in the administrative record, the Court concludes that Plaintiff has established that she is entitled to an award of benefits. . . .Although Plaintiff is entitled to benefits, she is not entitled to those benefits from Defendant Cigna, which is not the plan, the plan sponsor, a plan fiduciary, or the plan administrator. Nor did Defendant Cigna issue the policy, administer Plaintiff’s claim under the policy or participate in the denial of Plaintiff’s benefits. See Everhart v. Allmerica Financial Life Ins. Co., 275 F.3d 751, 753-54 (9th Cir.2001) (holding that the plaintiff could sue the plan and plan administrator for ERISA plan benefits, but not the plan insurer).

The court distinguished Seagate U.S. LLC v. Cigna Corp., 2006 U .S. Dist. LEXIS 26776 (N.D.Cal.2006), relied upon by the plaintiff. In that case, the plaintiff had alleged that “CIGNA’s name” appeared on the face of the policies, and the court consequently denied CIGNA’s motion to dismiss.

In the case at bar, the court contrasted the facts with those in Seagate, stating:

This case, however, is past the pleading stage and Plaintiff provides no evidence to establish that Defendant Cigna is legally responsible for paying the benefits which Plaintiff seeks in this action. Nonetheless, the Court’s ruling is based on counsel’s representation at the hearing that CGLIC is responsible for the judgment awarded to Plaintiff as well as any attorneys’ fees and costs awarded.

Penalties Under 29 U.S.C. Sections 1132(c) And (g)

The plaintiff contended that the defendants (Cigna Corporation, Connecticut General Life Insurance Company) did not provide documents that it was obliged to furnish the plaintiff by virtue of 29 U.S.C. 1024(b)(4). That statute states:

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.

Liability Limited To “Administrators”

The defendants argued that, under Ninth Circuit authority, only the administrator (as defined by ERISA), can be sued for failing to provide plan documents. The district court agreed, observing that:

ERISA defines an administrator as “the person so designated by the terms of the instrument under which the plan is operated” or “if an administrator is not so designated, the plan sponsor.” 29 U.S.C. § 1002(16)(A). The “plan sponsor” is “the employer in the case of an employee benefit plan established or maintained by a single employer.” 29 U.S.C. § 1002(16)(B)(i).

The court held for the defendants, stating:

Plaintiff’s argument that the Ninth Circuit has not definitively decided the issue is unavailing, as is her reliance on Younkin v. Prudential Ins. Co., 2006 U.S. Dist. LEXIS 65345 (D.Mont.). As explained in Rodriguez v. Reliance Standard Ins. Co., 2004 U.S. Dist. LEXIS 18485, *6-7 (N.D.Cal.), “the Ninth Circuit has expressly held that only those entities designated by the statute as the administrator can be held liable as the administrator for failure to provide plan documents.”

Note: The holding in Younkin v. Prudential Ins. Co. of America, Slip Copy, 2006 WL 2524214 (D.Mont. 2006), rejected by the district court King v. Cigna Corp, essentially holds that a claims administrator may be held accountable under the statute. In that case the court stated:

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)

Contrary Authority - In addition to Younkin, note that other contrary authority exists, and in fact there is a split in the circuit courts of appeal on the issue:

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).

Jones v. UOP, 16 F.3d 141, 145 (7th Cir.1994). [This subject is discussed in some detail in ERISA Plan Information Requests: (Unit 5) “Who Is Entitled To Request Plan Information?”]

See Also – ERISA Plan Information Requests Series

  1. ERISA Plan Information Requests: (Unit 1) “Statutory Purpose and Scope”
  2. ERISA Plan Information Requests: (Unit 2) “Statutory Purpose and Scope”
  3. ERISA Plan Information Requests: (Unit 3) “Who Is Entitled To Request Plan Information?”
  4. ERISA Plan Information Requests: (Unit 4) “Who Is Entitled To Request Plan Information?”
  5. ERISA Plan Information Requests: (Unit 5) “Who Is Entitled To Request Plan Information?”

Section 502(a)(1)(B) – The plaintiff also advanced a breach of fiduciary duty claim, but the court dismissed the claim on the view that a fiduciary’s mishandling of an individual benefit claim does not violate any of the fiduciary duties defined in ERISA. Ford v. MCI Communications Corp. Health and Welfare Plan, 399 F.3d 1076, 1082 (9th Cir.2005) (quoting Amalgamated Clothing & Textile Workers Union, AFL-CIO v. Murdock, 861 F.2d 1406, 1414 (9th Cir.1988)).

The court distinguished Caplan v. CNA Short Term Disability Plan, 479 F.Supp.2d 1108 (N.D.Cal.2007), stating:

[Plaintiff's] reliance on Caplan, however, is . . . misplaced. In Caplan, the Court dismissed the plaintiff’s claim under 29 U.S.C. section 1332(a)(3)to the extent that it was duplicative of the plaintiff’s section 1132(a)(1)(B) claim. But the Court found that the “the equitable relief Plaintiff seeks under section 1132(a)(3) … may be different than the relief available under section 1132(a)(1)(B), and such relief might not be available to Plaintiff under the section 1132(a)(1)(B) claim alone.” 479 F.Supp.2d at 1112-13. Therefore, the Court determined that it would be “premature” to dismiss the plaintiff’s entire claim under section 1132(a)(3).

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