Ninth Circuit Finds that Plans Cannot Be Liable for Certain ERISA Penalties

September 3, 2016


        Joining seven other federal appellate courts, the 9th Circuit Court of Appeals recently held that a benefit plan governed by ERISA cannot be liable for statutory penalties assessed for failing to follow ERISA claims procedures. According to the court, the penalties can only be assessed against plan administrators and not plans themselves. The fact that ERISA plans and the administrators of those plans are distinct legal entities under the ERISA statute was a deciding factor for the court. Under ERISA, only “plan administrators” can be assessed penalties for failing to produce requested documents. The court reasoned that the fact that the “plan administrator” is an entity separate from the plan means that the statute intended for only the “plan administrator” to be penalized. Accordingly, the court vacated the portion of the penalty that was assessed at the plan itself. Plan administrators are cautioned to carefully follow ERISA claims procedures or run the risk of potentially being subjected to an entire ERISA statutory penalty.


Lee v. ING Group, N.V., No. 14-15848 (9th Cir. July 25, 2016)

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