Failure to Provide Plan Documents Nets Participant $160K Award

April 30, 2004 ( - An employer's failure to provide plan documents has resulted in a $160,000 penalty, even though the participant was not entitled to the benefits outlined in the requested documents.

The employee, Joseph Gorini, sought severance benefits and penalties under Section 502(c) of the Employee Retirement Income Security Act (ERISA).   In his claim Gorini alleged his former employer, AMP Incorporated, failed to provide requested plan documents in a timely fashion, according to an EBIA report.

At the initial hearing, the trial court determined Gorini was not entitled to severance benefits.    However, the court found AMP failed to provide the requested plan documents and levied a $160,780 judgment against the company.   AMP appealed.  

In the appeal, AMP argued the employee was not a plan participant and consequently was not entitled to penalties under ERISA Section 502(c).
  Further, AMP contended the trial court abused its discretion in assessing penalties.

The U.S. 3 rd Circuit Court of Appeals disagreed, upholding the lower court’s judgment.   In the opinion, the appellate court held the standard to be applied in determining an individual’s status as a participant is whether he or she has a “colorable claim for benefits.”  

The court also held that the employee did not lose his status as a participant merely because he sought severance benefits after his employment terminated. Such an argument, the court noted, would allow only current employees to draw severance benefits, an interpretation inconsistent with the concept of severance benefits.

The case is G orini v. AMP Incorporated.   A copy of the full decision is available at .