Doctor Assessed over $170K in Civil Penalties for not Providing Plan Info

September 17, 2007 ( - The U.S. District Court for the Middle District of Alabama assessed a civil penalty of $179,960 against a doctor whom it determined never provided pension plan information and documents to a former associate in his practice.

In its opinion, the court said Dr. Edward R. Teitel was subject to a daily civil monetary penalty of $110 for each of the 1,636 days he delayed in providing documents which established Dr. Robbin Cromer-Tyler’s rights in the Edward R. Teitel, M.D., P.C. Money Purchase Pension Plan. In addition, the court said Teitel was liable for civil penalties for prejudice against Cromer-Tyler for denying her a distribution of the full vested amount of her account balance and therefore, treating her differently than other similarly situated plan participants.

The district court also ordered Teitel to pay the reasonable attorney’s fees and costs incurred by Cromer-Tyler in her attempts to obtain information from Teitel and in prosecuting her claims under the Employee Retirement Income Security Act (ERISA).

Teitel was plan administrator for the Money Purchase Pension Plan and for a Profit Sharing Plan. According to the court opinion, he admitted he did not understand that he had any fiduciary duties to the plans.

The court determined that, in serving as administrator of the plans, Teitel failed to maintain records concerning the plans and their operations, including plan documents, adoption agreements, summary plan descriptions, and annual reports. He also failed to provide a summary plan description and summary annual reports to participants in the plans as required by ERISA.

In addition, the court found Teitel failed to maintain a fiduciary bond with respect to the plan as required by the plan documents and ERISA.

After Cromer-Tyler terminated her employment at Teitel’s practice, Teitel informed her that she had no vested account balance in the Money Purchase Pension Plan. The court pointed out Teitel failed to provide Cromer-Tyler with the specific reasons she was not vested, specific references to the relevant plan provisions, and the plan’s claim review procedure.

The court said not only was Cromer-Tyler actually 100% vested in the plan, but because she had never been provided with plan documents, she had no ability to assess Teitel’s erroneous statement that she was not vested. Counsel for Cromer-Tyler sent a letter to Teitel requesting plan documents. Teitel’s counsel provided certain documents relating to another retirement plan, but did not provide documents relating to the plan at issue in the lawsuit, and specifically, did not provide Cromer-Tyler with the vesting schedule for the plan.

After the suit was filed against Teitel, he provided Cromer-Tyler with the vesting schedule for the plan. The information showed Cromer-Tyler was 100% vested in the plan. Following the issuance of a Court Memorandum Opinion and Order, which allowed Cromer-Tyler to pursue a claim for benefits relating to the plan, she filed her claim for benefits and filed her appeal of the denial of benefits under the plan.

Teitel issued a decision stating that Cromer-Tyler’s claim for benefits from the plan would be granted; however, he conditioned the distribution of her account balance in the plan upon her execution of “a general and complete release of all claims.”

Additionally, it was discovered that in the course of the litigation, Teitel contacted the custodian that held Cromer-Tyler’s account balance in the plan and requested that a portion of his attorney’s fees be paid out of Cromer-Tyler’s account in the plan.

The opinion is here .