Company Fined for Failure to Provide Plan Documents

November 8, 2006 (PLANSPONSOR.com) - The US District Court for the Eastern District of Michigan has ruled that a plan administrator must pay a former employee $10,500 for failing to provide her with pension plan documents she requested.

According to the opinion, the court fined Michigan Consolidated Gas Co.’s pension plan administrator Elizabeth Pochini $100 per day, as required by the Employee Retirement Income Security Act (ERISA), from March 17, 2004, when the company was served with Diane Zirnhelt’s lawsuit, until July 1, 2004, when the requested documents were provided to Zirnhelt’s attorney.

ERISA requires a plan administrator to respond within 30 days to a request for information from a plan participant or beneficiary.

Pochini argued that she failed to provide the documents requested by fax on May 2, 2003, after Zirnhelt’s attorney confirmed that he had been advised Zirnhelt was not entitled to benefits under the plan, thinking the request for documents was moot at that point. However, the court opinion stated that the defendants conceded that Zirnhelt only needed to have a “colorable claim” to benefits to rightfully request plan documents, and not a successful claim for benefits.

Zirnhelt filed a lawsuit on February 19, 2004 claiming she was entitled to benefits under the company’s pension plan and claiming the plan’s vesting requirements violated ERISA. She also requested in her lawsuit penalties beginning on June 1, 2003 for failing to provide her with plan documents she requested.

The court granted summary judgment to the company on the first two claims since the plan document in effect at the time of Zirnhelt’s termination required 10 years of service to vest and excluded years before a participant attained age 22. The court said Zirnhelt conceded that she was not entitled to benefits based on that provision and that the vesting requirement was not in violation of ERISA minimums.

The court began the penalty period at the time the lawsuit was served, rather than 30 days after the initial request, saying the ultimate outcome of her lawsuit was not affected by the delay.

The case is Zirnhelt v. Michigan Consolidated Gas Co., E.D. Mich., No. 04-CV-70619, 11/1/06.

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