“Can I have all documents related to my retirement plan benefit?” If you are involved with administering an ERISA-governed plan, you have probably received this type of vague request. After reading your crystal ball, you might assume the participant wants a summary plan description and perhaps a copy of the plan document. While that seems reasonable, the problem with these types of vague requests is that if your crystal ball happens to be foggy on a particular day, you could face penalties of up to $110 per day for not providing the requested materials. Thankfully, the Sixth Circuit Court of Appeals has taken a common-sense “clear notice standard” approach to resolving these issues, which helps eliminate the need to rely on clairvoyance and crystal balls.

These types of broad document requests are often made during the formal claim/appeal process, as was the case in Cultrona v. Nationwide Life Ins. Co. At issue in Cultrona was whether the participant was entitled to statutory penalties under ERISA Section 502(c)(1)(B), which gives courts discretion to penalize plan administrators up to $110 per day if they fail to provide certain plan-related documents within 30 days of receiving a written request. Following the denial of her claim for benefits under the company’s death benefit plan, the claimant’s attorney requested “all documents comprising the administrative record and/or supporting [the plan’s] decision.” While the plan administrator provided some documentation, it did not provide a copy of the written plan document until seven months after the initial request. Because the terms of the plan document were the primary basis for the claim denial, the district court determined that the administrator should have provided a copy in response to the request. The court then imposed a penalty of $55 per day ($8,910 total) on the plan administrator for failure to timely provide the document.

On appeal, the plan administrator argued that the court should adopt the “clear notice standard” for determining if it was required to provide the plan document to the claimant. Under this standard, individuals requesting plan-related documents that they are entitled to under ERISA must “provide clear notice to the plan administrator of the information they desire.” The key question here is whether the plan administrator knew, or should have known, which documents were being requested. If so, the plan administrator has a duty to provide the documents and faces penalties of up to $110 per day if it does not provide the documents within 30 days of the request. Even though the claimant’s request was broad, the Court ultimately agreed with the district court that the plan administrator should have known that the claimant wanted a copy of the plan document under the circumstances. Thus, the plan administrator was required to pay the statutory penalties.

While the adoption of the “clear notice standard” is not particularly enthralling or surprising, there are a few nuggets of wisdom buried in this decision. First, while courts do not expect plan administrators to rely on crystal balls, plan administrators should use some common sense when responding to participants’ document requests. It seems like a no-brainer (at least to this court) that a claimant would want a plan document when that was the basis for the claim denial.

Second, when in doubt, ask for clarification. Even more compelling than the adoption of the new standard was the Court’s logical statement that “a plan administrator is free to place the burden of clarity squarely on the requester simply by replying to an ambiguous demand for . . . documents with the administrator’s own request for greater specificity.” In elementary school, we were all told that there are no stupid questions. While some may argue with that old adage, I would submit that the same applies when trying to figure out what a participant is asking for. If you do not know, it is better to ask for clarification then to face potentially steep penalties for not providing the right documents.

We have seen situations where participants really need documentation; they just cannot find the right words to adequately describe what they need. In these situations, we believe the plan administrator has a duty to help the participant. But we have also seen abusive situations. For example, a participant (or more likely, the participant’s legal counsel) makes an ambiguous request that appears to be designed to try to seek penalties later. This is an example of where it is perfectly appropriate to ask for clarification before embarking on a photocopy project.  Another scenario is where a participant makes an overly broad demand as a form of harassment.  In that scenario, we would suggest that you provide what the participant is entitled to, and explain the limitations of the disclosure. In any scenario where you suspect an abusive purpose, you may want to consider asking the participant (or his counsel) to write back if he believes he is entitled to any additional documentation that was not provided, and to provide an explanation as to why he is entitled to this additional documentation. Abusive situations like this are fairly unusual, but requiring a participant to play by the rules rather than inappropriately drive up costs is in the best interests of all plan participants.