Eleventh Circuit Renders Landmark Decision on ERISA Sanctions

While everyone has been focusing on COVID-19 and still getting used to homeschooling their children, the Eleventh Circuit released a long-awaited (by some, at least) opinion pertaining to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA). The March 27, 2020 decision in Williamson v. Travelport, LP, 953 F. 3d 1278 (11th Cir. 2020), clarified the scope of document requests that trigger ERISA’s § 1132(c) penalty provisions and the manner in which such requests must be made.

Section 1132(c) imposes a sanction for an administrator’s failure or refusal to provide information “which [the] administrator is required by this subchapter to furnish to a participant…”  The Section’s phrase “by this subchapter” applies to an administrator’s requirement to provide the information identified in ERISA 29 U.S.C. § 1024(b)(4). The documents required for production by an ERISA plan administrator under § 1024(b)(4) include the latest updated summary plan description, the latest annual report, any terminal report, and any bargaining agreement, trust agreement, contract or other instruments under which the plan is established or operated. 

Nevertheless, some plaintiffs seek sanctions under § 1132(c) for documents that do not fall within § 1024(b)(4), including historical or original documents, and documents underlying a pension plan benefit calculation, among others.  

In Williamson, the Eleventh Circuit ruled that the penalties available under § 1132(c) “cannot be imposed for failure to provide documents other than those specifically enumerated in § 1024(b)(4).” In so holding, the court rejected the plaintiff’s contention that sanctions were available for failures to produce claims-specific and employment history document requests, including alleged violations of ERISA § 209(a), 29 U.S.C. § 1059(a) and Department of Labor regulations.

The court affirmed the dismissal of the plaintiff’s claims for penalties under § 1132(c).1 It further clarified that the term “other instruments” in § 1024(b)(4) is to be interpreted narrowly as “formal legal documents governing the plan” and does not simply refer to documents “related to” a plan.

In addition to clarifying the scope of document requests triggering § 1132(c) sanctions, the Eleventh Circuit joined its sister courts in holding that, although a request for documents need not name the precise documents it seeks, it must provide a claims administrator with “clear notice” of what is requested under § 1024(b)(4). While a consideration of whether a request provides “clear notice” is fact and context specific, a generalized request does not fulfill those obligations.

Ultimately, the court affirmed the dismissal of the plaintiff’s claims under § 1132(a)(3) and (c), but reversed the dismissal of the claim for benefits under § 1132(a)(1)(B) with attorney’s fees under § 1132(g)(1), and remanded to the district court. In doing so, the court found that the district court improperly ruled on the merits of the plaintiff’s § 1132(a)(1)(B) claim because the plaintiff stated plausible claims for relief and the court did not have the full administrative record before it when it ruled on the motion to dismiss.

At the beginning of its ruling on the issue, the Eleventh Circuit recognized that it has few opportunities to consider the issue of §1132(c) penalties. Next time a plaintiff seeks sanctions under § 1132(c), Williamson will be welcome precedent.  If they are careful in ensuring that they produce documents required under the express terms of ERISA § 1024(b)(4) in response to a plan document request, then plan administrators can use Williamson to help fend off improper requests for sanctions related to other documents and perhaps build a case for the rare award of attorneys’ fees to the plan if a sanctions claim is pursued based on failure to produce other documents.  Also, taking a lesson from Williamson, plan administrators should consider responding to document inquiries that they view as unclear by asking for clarification and building a record that the request does not provide “clear notice” of documents sought.       

See Footnotes

1 The district court in Williamson v. Travelport, LP, 289 F. Supp. 3d 1305, 1314-16 (N.D. Ga. 2018), held, among other things, that § 1132(c) does not authorize statutory penalties against an administrator for failure to provide documents under 29 C.F.R. §2560.503-1, which requires the administrator to produce or disclose documents: (1) relied upon in making the benefit determination; (2) submitted, considered or generated in the course of making the benefit determination; (3) which demonstrate compliance with the administrative processes and safeguards in making the benefits decision; or (4) in the case of a group health plan or plan providing disability benefits, which constitutes a statement of policy or guidance with respect to the plan concerning the denied treatment option or benefit for the claimant’s diagnosis.  See 29 CFR §2560.503-1 (m)(8).  

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.