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Statutory Penalty Recoverable Only from Plan Administrator, Not from Claims Administrator

Statutory Penalty Recoverable Only from Plan Administrator, Not from Claims Administrator

ERISA and Life Insurance News
(February 6, 2012)

Saylors sought to recover long-term disability benefits under the Avery Dennison Long-Term Disability Plan and brought claims against the plan, Avery Dennison Corporation, and Hartford. Saylors alleged that Hartford was the administrator of the plan, and that Hartford failed to provide certain plan documents that she had requested. Saylors sought to recover statutory penalties under ERISA, 29 U.S.C. § 1132(c).

In ruling on the defendants’ motions to dismiss, the court noted that plan administrators "have a duty to provide a plan summary and other documents to each participant upon request." Saylors claimed that Hartford breached this obligation by failing to provide a complete copy of the materials used by the defendants to evaluate and deny her claim.

However, 29 U.S.C. § 1132(c) only applies to administrators designated by the plan. The court pointed out that not all entities providing employee benefits are "administrators" under the statute. If no person is designated in the plan documents as the plan administrator, then the plan sponsor is deemed to be the administrator. In that event, and absent a specific declaration in the plan documents, the court cannot infer that an insurance company paying benefits under the plan occupies co-administrator status.

Because the plan did not designate Hartford as the plan administrator, and because Saylors only alleged that "Hartford is the insurer and claims administrator of the LTD Plan," the court found that Hartford was not the "administrator" subject to statutory penalties pursuant to 29 U.S.C. § 1132(c).

Hartford’s motion to dismiss was therefore granted. Moreover, because Saylors did not allege that she had requested or failed to receive information from the plan or from Avery Dennison, the court found she had failed to state a claim for violation of 29 U.S.C. § 1132(c) as to the remaining defendants.

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