In Zavislak v. Netflix, Inc., the U.S. District Court for the Northern District of California has largely rejected a plaintiff’s assertion that an employer/plan administrator for an ERISA self-funded group health plan failed to timely furnish certain plan documents, including the plan’s claims administration documents, after the plaintiff’s written request.
Law. ERISA § 104(b)(4) requires a plan administrator to furnish copies of specified plan documents within 30 days after receiving a written request from a participant or beneficiary. Failure to timely provide requested documents could lead to financial penalties. Courts are authorized, in their discretion, to impose penalties of up to $110 for each day that the requested documents are not provided, starting on the 31st day after the request.
This disclosure obligation falls on the plan administrator. Unless the plan document designates a different person or entity, the plan administrator is the plan sponsor, which in a single employer plan is the employer.
The specified documents that must be provided upon request include: the latest updated summary plan description; the latest Form 5500 and any applicable bargaining agreement, trust agreement, contract or “other instruments under which the plan is established or operated.” The Department of Labor (“DOL”) and the courts have found this last category of documents to include plan documents, insurance policies, fee schedules, third party administrator (“TPA”) contracts (if they impact plan administration), and minutes of plan meetings affecting plan administration.
Facts. The plaintiff in Zavislak was a covered beneficiary under the employer’s self-funded ERISA health plan, which was administered by a lead TPA. The TPA functioned as an intermediary for transmitting information between the plan’s claims administrators.
The employer had entered into administrative agreements with the TPA and the claims administrators that defined the parties’ obligations and services regarding the plan. Under administrative service agreements (“ASAs”) between the TPA and the claims administrators: (i) the claims administrator received participants’ and beneficiaries’ claims, priced them and sent the claims back to the TPA; and (ii) the TPA adjudicated the claims and returned them to the claims administrator to pay the healthcare provider.
In January 2021 (during the COVID-19 pandemic), the plaintiff made a written request to the employer for various documents including documents used by the claims administrator in making benefit determinations under the plan. Due to COVID-19 work-from-home arrangements, the employer’s benefits manager did not receive the request (and, therefore, did not respond to it). A month later, the plaintiff sent a second request for documents which specifically explained that ERISA imposes penalties for failures to timely provide plan documents in response to a written request. Shortly thereafter, the employer’s in-house counsel sent the plaintiff several plan documents, including a SPD, a summary of benefits and coverage, and other plan summaries.
Following a coverage denial in late 2021, the plaintiff requested additional documents including the ASAs with the plan’s lead TPA and three claims administrators. The employer responded by providing several additional plan summaries, but not the ASAs. In response, the plaintiff sued the employer in federal court seeking ERISA statutory penalties for the failure to furnish the requested ASAs and claims administration documents.
District Court Ruling. In reviewing the plaintiff’s claim, the court initially observed that the Ninth Circuit had taken a narrow interpretation of the documents that must be furnished in response to an ERISA document request. It stated that under the Ninth Circuit’s approach, these documents include ones that allow a participant (or beneficiary) to know where he or she stands regarding the plan, including: (i) benefits to which the participant may be entitled; (ii) circumstances that may result in the denial of benefits; and (iii) procedures for obtaining benefits.
The court commented that while ERISA includes the term “contract” in its list of documents that must be furnished, this does not include all contracts between a plan and its service providers. It explained that ASAs are not subject to disclosure because they: (i) govern only the relationship between the employer and claims administrator; and (ii) do not govern the relationship between plan participants and the employer. In the instant matter, the court concluded that the employer’s ASAs with the lead TPA and the claims administrators governed only the relationship between the employer and its service providers and did not need to be disclosed.
The plaintiff had argued that one of the ASAs should be disclosed because it provided information to participants about the plan’s claims and appeals deadlines. The court responded by noting that this same information was available in other documents disclosed by the employer.
The plaintiff also contended that another ASA should be disclosed because it: (i) specified the basis upon which payments were made to and from the plan; and (ii) provided a funding policy or method for the plan. However, the court determined that this information did not apprise the plaintiff about his benefits under the plan and, therefore, did not need to be disclosed.
Based on the foregoing, the court dismissed the plaintiff’s claim that he was entitled to receive the plan’s ASAs with the lead TPA and claims administrators.
The court also declined to grant the plaintiff’s request for the full amount of ERISA penalties for the employer’s failure to timely furnish certain other plan documents that did require disclosure. It awarded the plaintiff a reduced penalty amount of $15 per day (instead of the possible $110 per day), citing the “exceptional circumstances created by the COVID-19 pandemic” and the DOL’s suspension of certain ERISA deadlines during this period.