In the May 2009 edition of Employee Benefits Developments, we reported on a case from the U.S. Court of Appeals for the Seventh Circuit which held that a plan administrator violated ERISA by failing to provide a participant with the internal guidelines used by its claims administrator. These internal guidelines were expressly cited by the claims administrator in denying the participant’s claim for benefits. Following the decision of the Seventh Circuit, the case was remanded to the federal trial court to determine the appropriate statutory penalties for the plan administrator's failure to produce the requested documents. After hearing evidence, the federal trial court ruled that the participant was entitled to statutory penalties of $9,720 ($30 per day for a 309-day delay in producing the requested documents) — the participant had been seeking a $1 million dollar penalty. In reaching a decision on the statutory penalties, the court took into consideration, among other things, the length of the delay, the prejudice to the plaintiff, and the efforts made by the plan administrator to help the plaintiff gather information from the claims administrator. The court's opinion indicated its belief that a larger penalty was not needed for deterrence purposes.

On remand, the federal trial court was also asked to determine whether the plan administrator had breached its fiduciary duty in connection with its failure to help secure the documents requested by the participant. On this issue, the court concluded that the plan administrator did breach its fiduciary duties to the participant by not taking additional steps to help obtain copies of the claim administrator's internal guidelines. The court indicated its belief that the plan administrator could have done more to persuade the claims administrator to turn over the guidelines without interfering inappropriately with the disposition of the particular claim. The stipulated damage amount for the breach was $603.25. (Mondry v. American Family Mutual Insurance Co., W.D. Wis. 2010)