How Can I Protect My Client Against a Reimbursement Claim From an ERISA Plan?



Question: Is there anything to the idea of protecting your client's rights against a potential subrogation or reimbursement claim from an ERISA plan by sending a notice letter to the plan administrator and requesting documentation from the plan? As I understand it the ERISA plan can be penalized for failing to provide documents in response to a written request.


Answer: ERISA grants a plan participant the right to make a written request and receive certain specified documentation from the plan administrator. This right is stated at 29 U.S.C. § 1024(b)(4) which provides as follows:

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.

The failure to provide this information within 30 days can result in the imposition of a penalty of up to $110 per day for each day of noncompliance. See 29 U.S.C. § 1132(c)(1)(B) and 29 C.F.R. § 2575.502c-1 (increased penalty from $100 to $110).

While the failure to respond to a proper request can result in some protection for your client, it is important to note that: 1) this penalty is purely discretionary and where courts have enforced the penalty, the actual sanction is closer to $40 per day and 2) the request should be made to the plan administrator (often the employer) and should not be directed to the subrogation collection agent; see Delprado v. Sedgwick Claims Mgmt. Servs., Inc., 2013 WL 1174142 (N.D.N.Y. Mar. 20, 2013).

In conclusion, the teeth to this provision are not as big as they appear but it certainly is something that you can use in seeking a favorable result for your client when negotiating a claim for reimbursement.

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