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Huss v. IBM Medical and Dental Plan


November 4, 2009


The opinion of the court was delivered by: Judge James B. Zagel


This was an ERISA suit to overturn the denial of enrollment eligibility for Joseph R. Huss, Jr., Plaintiff Eileen Huss's 25 year old mentally disabled son, in the employee welfare plan sponsored and administered by Plaintiff's former employer, IBM. On March 20, 2009, I granted summary judgment for Plaintiff and found that Joseph R. Huss Jr. was entitled to be immediately enrolled in the IBM Medical and Dental Plan ("the Plan"). Additionally, in my March 20th

opinion, I granted Plaintiff's motion for summary judgment on her claim for statutory penalties pursuant to 29 U.S.C § 1132(c)(1). What remains for me to determine is the amount of statutory penalties to be imposed on Defendants. For the reasons set forth below, I impose statutory penalties on Defendants in the amount of $15,220.00.


ERISA requires plan administrators to provide specific information, such as "the latest updated summary, plan description. . . or other instruments under which the plan is established or operated," within 30 days of written request. 29 U.S.C § 1024(b)(4). Failure to comply with such a request can result in fines imposed under 29 U.S.C. § 1132(c)(1). Ames v. American National Can Co., 170 F.3d 751, 758 (7th Cir. 1999).

The maximum penalty for such a violation is $110.00 for each day a request within the scope of § 1024(b)(4) is refused. 29 U.S.C. § 1132(c); 29 C.F.R. § 2575.502c-1. Prior versions of summary plan descriptions ("SPDs") requested by a plan participant fall within the scope of the penalty provisions of 29 U.S. C. §§ 1132(c) and 1024(b)(4) if they are material to an evaluation of the claimant's rights. See Ames, 170 F.3d at 759. As I previously held in my order granting Plaintiff's motion for summary judgment, the SPDs in effect on June 9, 2004 and the intervening amendments to the SPD published up until the version relied upon by IBM in 2006 were "critically important documents in evaluating Huss's rights."

"Because the statute provides no criteria to guide determination of the amount to be awarded within that limit, that determination is left to the discretion of the district judge." Lowe v. McGraw-Hill Companies, Inc., 361 F.3d 335, 338 (7th Cir. 2004). Among the factors courts consider when making penalty determinations are "bad faith or intentional conduct on the part of the administrator, the length of the delay, the number of requests made and documents withheld, and the existence of any prejudice." Jackson v. E.J. Brach Corp., 937 F.Supp 735, 741 (N.D. Ill 1996). As recognized by the Seventh Circuit, "fines may be necessary to make employers take seriously their disclosure obligations when an actual lack of information results from the employer's reluctance to respond to a request for information." Ames, 170 F.3d at 760. The severity of fines imposed, within the court's discretion, can be a nominal amount when no bad faith is apparent and plaintiffs are not substantially prejudiced*fn1 or more substantial when conduct is intentional or indifferent.*fn2 Additionally, it has been held that a plaintiff is prejudiced by the mere fact that defendant's conduct has forced them to continually request documents, spend time disputing a claim, or hire an attorney. Pisek v. Kindred Healthcare Inc., No. 06-cv-372, 2007 U.S. Dist LEXIS 51896, at *19-20 (S.D. Ind. July 17, 2007).


Although Plaintiff asks this Court to use its discretion and apply a maximum statutory penalty of $110 for each day an individual document was delayed, this view is inconsistent with the statute which states that the maximum fine per day to be imposed is $110. Furthermore, Plaintiffs cite no case where the application of penalties to multiple documents exceeds the statutory maximum of $110 per day.*fn3 Defendants, on the other hand, assert that this Court use its discretion to assign no statutory penalty.

Plaintiff proposes that the following documents qualify for the imposition of penalties:

A. Documents Requested Via Email on January 23, 2007: Due on February 22, 2007

(1) SPD published August 5, 2003

B. Documents Requested Via Letter on March 27, 2007: Due on April 26, 2007

(2) SPD published June 17, 2004

(3) SPD published July 22 , 2004

(4) SPD published August 12, 2004

(5) SPD published September 9, 2004

(6) SPD published June 30, 2005

(7) 2005 Plan Year SPD

(8) SPD published October 10, 2006

(9) SPD published November 2, 2006

(10) SPD published December 22, 2006

Two clear document requests are evident, and I will deal with each request in turn.

I begin first with document (1) which was requested in Plaintiff's January 23, 2007 email to plan administrators. This document contained the effective SPD for the period prior to June 9, 2004.*fn4 As recognized in my prior order granting summary judgment to Plaintiff, this document was of critical importance to Plaintiff. Defendants acknowledge that Plaintiff requested this document in an email on January 23, 2007 and that it was provided to her on April 26, 2007, 63 days after the statutorily prescribed period for delivery had expired.*fn5 I am unpersuaded by Defendants' argument that only "nominal" penalties should be applied to the tardiness of this document because there was "minimal delay." This document was critical to Plaintiff's ability to evaluate her rights and thus its delay did indeed prejudice Plaintiff. Additionally, a delay of 63 days, more than double the time allocated by statute to comply, can hardly be considered "minimal." I am therefore imposing a penalty of $60 per day for the delay of this document resulting in a penalty of $3,780.00.

Next, I turn to documents (2), (3), (4), (5), (6), (7), (8), (9), and (10). These documents were requested by Plaintiff, through her counsel, in a letter dated March 27, 2007. First, Plaintiff received document (5) on April 26, 2007 within the statutorily prescribed period of 30 days.*fn6 For this reason, document (5) will be excluded from my penalty calculation. Defendants deny that SPD versions prior to December 22, 2006 are encompassed in 29 U.S.C § 1024(b)(4). I find this argument unpersuasive, as I found in my previous order that these earlier SPDs were not only encompassed by 29 U.S.C § 1024(b)(4), but were material to Plaintiff's evaluation of her rights. Defendants also assert that there was no evidence of their intentional actions or bad faith. Again, I find Defendants unpersuasive as I found in my prior order that Defendants made affirmative misrepresentations to Plaintiff. Documents (2), (3), (4), (6), (7), (8), (9), and (10) were not submitted to Plaintiff until August 8, 2007, a delay of 104 days.

As I noted in my order granting Plaintiff's motion for summary judgment, Defendants affirmatively misrepresented to Plaintiff that 2004 SPDs were not available to send (four versions of the 2004 SPD were issued, documents (2), (3), (4), and (5) respectively). This constitutes both bad faith and intentional conduct. Furthermore, as stated previously, all of these documents reflect amendments made to the SPD between 2004 and 2006 and were therefore material to Plaintiff's evaluation of her rights. Finally, a 104-day delay is undeniably egregious. Because of Defendants' bad faith, the materiality of these documents, the unreasonable delay in providing these documents to Plaintiff, and the number of documents involved in this request, I assign the maximum penalty of $110 per diem amounting to a total penalty of $11,440.00.


For the foregoing reasons, statutory penalties are imposed on Defendants in the amount of $15,220.00.

James B. Zagel United States District Judge

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