Employer Hit with $6K ERISA Fine

U.S. District Judge Gary Feinerman of the U.S. District Court for the Northern District of Illinois ruled that Royal Management Corporation (RMC) of Lombard, Illinois, had not complied with the SPD furnishing mandate in the Employee Retirement Income Security Act (ERISA).

Feinerman said in his ruling that the RMC statutory penalty reflecting a $10 per day assessment for the duration of the time it did not supply the SPD to James Killian, whose wife Susan, RMC employee, had been diagnosed with cancer and had obtained treatment at an out-of-network facility. The plan denied the Killians’ claims, prompting James Killian to file suit alleging, among other issues, the SPD ERISA violation. ERISA requires the SPD to be furnished within 30 days of it being requested.

In an earlier ruling, the court had rebuffed claims that RMC had met the ERISA requirement by supplying a copy of the Certificate of Insurance for Susan Killian’s S035 Open Access Plan and of RMC’s Employee Benefits Summary.

Feinerman said in the ruling that he deliberately assessed a fee significantly lower than the $110 per-day fine called for in ERISA and Department of Labor regulations. “The facts of this case are comparable to those in which the plan administrator clearly failed to produce appropriate documentation, but did not act in bad faith and caused little or no actual harm to the plaintiff,” Feinerman wrote. “James (Killian) had at his disposal all the necessary information about Susan’s plan, and makes no showing that he was harmed by RMC’s failure to tender an ERISA-compliant SPD. RMC should have been aware of ERISA’s requirements for SPDs. Under the facts and circumstances of this case, the court finds that a penalty is appropriate, but that its magnitude should be modest, amounting to ten dollars per day.”

The case is James Killian vs. Concert Health Plan, et. al., Case 07 C 4755.