LTD Plan Hit with $9,800 Penalty for Late Plan Documents Copy Response

While U.S. District Judge Richard L. Young of the U.S. District Court for the Southern District of Indiana found that Kindred Healthcare Inc. was liable for a196-day delay in providing the documents to participant Peter Pisek, he ruled that claims administrator MetLife was not also liable for the late ERISA penalties.

Young also ruled that Pisek was entitled to a cost-of-living increase under the terms of the summary plan description (SPD). Because Young found that the terms of the SPD and the plan conflicted, he said the plan could not deny Pisek the cost-of-living hikes.

According to the opinion, Pisek was diagnosed with a soft tissue disorder called displacement, lumbar intervertebral and under the plan’s terms he was eligible for benefits for 24 months from the date the disability began.

The SPD also stated that if a participant received disability payments for over a year, the participant’s pre-disability earnings used to calculate benefits would be increased to account for inflation and typical price increases.

Pisek started getting benefits in July 2004 but was informed by MetLife in May 2005 that it would terminate his disability benefits in July 2006 because his disability was limited to 24 months of coverage.

In late 2005, Pisek sent a letter to MetLife requesting a copy of the Kindred plan, the court said. In response, however, MetLife only sent Pisek a copy of the SPD.

In October 2005, Pisek appealed MetLife’s decision that he did not qualify for longer disability payments and was not entitled to cost-of-living benefits. While MetLife was required under the plan to answer the appeal within 45 days, MetLife did not provide an answer until July 2006, when, it decided that Pisek qualified under the plan’s exception for longer benefits.

However, by that time, Pisek had already sued over the dispute because he had not received any response from Kindred or MetLife regarding his coverage lasting beyond 24 months and his cost-of-living increases.

The case is Pisek v. Kindred Healthcare Inc.,   S.D. Ind., No. 1:06-cv-372-RLY-TAB, 7/17/07.