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Penalty for Failure to Provide Plan Documents Cannot Be Claimed for First Time in Summary Judgment Brief

Penalty for Failure to Provide Plan Documents Cannot Be Claimed for First Time in Summary Judgment Brief

Juan v. Minnesota Life Ins. Co., 2016 WL 1169576 (N.D. Ga. Mar. 25, 2016)

ERISA and Life Insurance News
(November, 2016)

Ms. Juan’s husband, a native of Guatemala, was employed in Georgia. He participated in an ERISA plan sponsored by his employer, Shaw Industries, a company associated with Berkshire Hathaway. The plan provided a basic life insurance benefit of $30,000 and a basic accidental death insurance benefit of $30,000 under a group insurance policy issued by Minnesota Life. The policy was delivered to Berkshire Hathaway, as group policyholder, in Nebraska.

Ms. Juan’s husband was murdered in Guatemala while visiting his wife, who was a resident and citizen of Guatemala. Although her husband had not designated a beneficiary, Ms. Juan was the default beneficiary under the terms of the group policy.

Shaw Industries reported the death to Minnesota Life, which began an extended effort to obtain a certified death certificate and other documents. Minnesota Life repeatedly asked Ms. Juan’s attorney to provide a completed Form W-8BEN, an Internal Revenue Form needed for the payment of benefits to a foreign national. Instead of providing the form, the attorney sued Minnesota Life, alleging breach of contract. In an amended complaint, Ms. Juan sought to recover a daily penalty from Shaw Industries under 29 U.S.C. § 1132(c)(1), alleging that the employer had failed to provide plan documents upon request.

A few weeks after the complaint was filed, Ms. Juan’s attorney provided a signed Form W-8BEN. Minnesota Life paid the life insurance and accidental death insurance benefits, with interest computed at 6% per annum. The group policy provided that interest would be paid “at an annual rate determined by [Minnesota Life], but never less than 4% per year.” Ms. Juan then contended that additional interest was owed under a Georgia statute.

Ms. Juan filed a motion for summary judgment, alleging for the first time that Minnesota Life was a de facto plan administrator, and that it also was liable for a penalty under 29 U.S.C. § 1132(c)(1) for failure to provide plan documents. Minnesota Life and Shaw Industries filed cross-motions for summary judgment. Their motions were granted, and Ms. Juan's motion was denied.

The court rejected as untimely Ms. Juan’s claim to recover a penalty from Minnesota Life for the alleged failure to provide plan documents stating, “At the summary judgment stage, the proper procedure for plaintiff to assert a new claim is to amend the complaint in accordance with Federal Rule of Civil Procedure 15(a). Plaintiff has failed to properly assert any such new claim, and as a result, Minnesota Life is not liable for an ERISA penalty.”

The court also held that Minnesota Life was the claims administrator, not the plan administrator, as defined by ERISA. “Because Minnesota Life was not the plan administrator ...,” the court said, “it cannot be liable for the penalty, even if it had received a request for plan documents.”  

Finally, the court rejected Ms. Juan’s claim that a Georgia interest statute applied and held that the right to recover interest on the death benefits was governed by the law of Nebraska, where the group policy was delivered. Because Nebraska law required interest at a rate less than the minimum rate of 4% required by the policy, Minnesota Life had already paid all interest that could be due under the policy, the court said.

Regarding the claim for a penalty against Shaw Industries, the court noted that when Ms. Juan’s attorney requested information, a representative of Shaw Industries responded promptly, asking for an executed release from her husband’s estate. However, Ms. Juan’s attorney “did not respond with the requested information or in any way at all.”

Because the obligation to provide plan documents is triggered “upon written request of any participant or beneficiary,” 29 U.S.C. $ 1024(b)(4),  the court held that a plan administrator is not required to provide documents to a third party unless authorized in writing by the participant or beneficiary to do so. “While a plan administrator may be penalized for ignoring a request for information,” the court said, “Shaw Industries quickly responded in an attempt to obtain the estate’s consent. In so doing, Shaw Industries acted consistently with ERISA.”

Click here to view the full November 2016 Edition of the ERISA and Life Insurance News.

H. Sanders Carter
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Andrea K. Cataland
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Kenton J. Coppage
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