Not Communicating Health Benefits? ERISA Could Fine Your Company

Tom Jeffries | March 11th, 2011

An Illinois healthcare company was fined $5,880 by a judge in U.S. District Court for not complying with the Employee Retirement Income Security Act’s provision by delaying to provide a summary plan description (SPD) to a plan participant beneficiary.

Royal Management Corporation of Lombard, Illinois was assessed a $10 per day fine for the duration of time it did not provide a summary plan description to James Killian. Killian’s wife, Susan, who was an employee of the company, had been diagnosed with cancer and obtained treatment from an out-of-network facility. After Killian’s claims were denied, Mr. Killian filed suit alleging the ERISA benefit plan SPD violation among other issues.

Royal Management Corporation had provided the Killians with a Certificate of Coverage and Employee Benefits Summary.  The court ruled that the employer had not complied with the SPD furnishing mandate. However, Judge Gary Feinerman noted he deliberately set a lower fee than the $110 per-day maximum fine ERISA outlines in its regulations. The judge found the plan administrator “clearly failed to produce the appropriate documentation but did not act in bad faith and caused little or no actual harm to the plaintiff.”

Although the $5,880 fine may not have proved to create a financial burden for Royal Management Corporation, the fine does send a strong message regarding compliance with ERISA rules and regulations.  Be certain with any of your employee benefit plans that you are meeting all of the ERISA compliance requirements.

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