The U.S. District Court for the District of Montana recently awarded over $32,000 in penalties against an employer’s self-insured health plan and its third-party administrator (TPA) for failing to provide requested information to a plan participant. This case involved a dispute over mental health benefits and underscores the importance of promptly responding to participants’ information requests.
ERISA Requirements
The Employee Retirement Income Security Act of 1974 (ERISA) sets minimum standards for private-sector employee benefit plans. ERISA requires employers to automatically provide certain benefit-related documents, such as a summary plan description (SPD). Employers must also provide specific documents upon written request, including the latest SPD, Form 5500, and other plan-related documents. If these documents are not provided within 30 days, the participant may file a lawsuit, and the court can impose penalties of up to $110 per day from the date of failure.
District Court Decision
A plan participant and his daughter sued their self-insured health plan and its TPA after coverage was denied for the daughter’s mental health treatments. The plaintiffs alleged the plan violated the Mental Health Parity and Addiction Equity Act (MHPAEA) by imposing more restrictive limitations on mental health treatment compared to medical and surgical treatments. They requested documents related to the plan’s MHPAEA compliance.
The court ruled that the requested documents were covered under ERISA’s disclosure requirements. The defendants’ failure to respond triggered penalties, as it impeded the plaintiffs’ ability to understand and protect their rights under MHPAEA and ERISA. The court imposed penalties of $110 per day for 294 days, totaling $32,340.
Conclusion
This case highlights the necessity for employers to comply with ERISA’s disclosure requirements to avoid substantial penalties and ensure participants can access critical information about their benefits.