Failure to Provide Plan Document Proves Costly

March 13, 2006 ( - The US District Court for the Northern District of Illinois has awarded a statutory penalty of $20 per day for 511 days to an employee whose employer failed to respond to his request for a copy of its severance plan document.

The court rejected LaSalle Bank Corp.’s argument that it had no obligation to provide Medapati Reddy with a copy of the plan because it had satisfied the Employee Retirement Income Security Act (ERISA) requirements by giving Reddy a copy of the plan’s summary plan description (SPD), BNA reports.   However, the court did deny Reddy’s request for the statutory maximum penalty of $110 per day, saying there was no evidence that LaSalle intentionally concealed the plan document from him.

The court noted that, although the plan and SPD were nearly identical, the SPD did state that it was “merely an explanation and should not be relied upon other than as a general summary of the features of the Plan.”   The SPD stated that employees’ rights would be governed by the terms of the plan document.

When Reddy’s position was eliminated in 2002, the bank offered him nine weeks’ severance pay if he signed a waiver and release.   Reddy was sent a copy of the severance plan’s SPD.

LaSalle only paid Reddy four and a half weeks of severance pay and terminated future payments because of his alleged failure to return a laptop computer to the bank. After his benefits were terminated, Reddy requested a copy of the official plan documents. LaSalle did not send him a copy of the plan until he initiated his lawsuit.