Boyd et al v. Sysco Corporation et al

Filing 55

ORDER granting defendants' 50 Motion for Summary Judgment; denying plaintiffs' 45 Motion for Summary Judgment. This order pertains to the second claim in the complaint. The Court will issue an order at a later time ruling on the parties' cross motions for judgment. Signed by the Honorable R. Bryan Harwell on 9/3/2015. (hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Wayne Boyd
and Whitfield R. Boyd,

)
)
)
Plaintiffs,
)
)
vs.
)
)
Sysco Corporation,
)
Sysco Corporation Group Benefit
)
Plan, and United Behavioral Health, )
)
Defendants.
)
______________________________)

Civil Action No. 4:13-cv-00599-RBH

ORDER

Pending before the Court in this ERISA action are the parties’ cross motions for summary
judgment as to the second cause of action, the ERISA penalty claim.1 (ECF No. 45, Plaintiffs’ Motion
for Summary Judgment on Second Cause of Action and ECF No. 50, Defendants’ Motion for Summary
Judgment on ERISA penalty claim). The Complaint in this action alleges as a second cause of action
failure of the administrator to provide information requested by a participant or beneficiary pursuant
to 29 U.S.C. § 1024(b)(4), 1132(a)(1)(A), and 1132(c). In an order dated July 3, 2014, the Court
allowed limited discovery relating to the second cause of action, including one interrogatory requesting
an explanation of the reason why the plan document was not produced after the plaintiffs’ initial
request. The Court also allowed the plaintiffs to serve up to five requests for admissions regarding and
limited to the defendants’ failure to respond to the plaintiffs’ request for documents made in November
2012. (ECF No. 19)

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The court may impose a penalty of up to $110 per day from the date of the failure to provide certain information
concerning the plan. See 29 U.S.C. § 1132(c)(1) and C.F.R, Section 2575.502c-1.

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Procedural History
The plaintiffs allege that Plaintiff Wayne Boyd was an employee of Defendant Sysco
Corporation and that his dependent son, Plaintiff Whitfield R. Boyd, was an insured under a group
benefit plan sponsored by Defendant Sysco Corporation. Plaintiffs further allege that Defendant United
Behavioral Health is the insurer and claims administrator for the mental health benefits provided by the
plan. Plaintiffs’ claim for mental health benefits under the plan was denied on October 18, 2011. (ECF
No. 49-10, pp. 40-44, UBH 293-97) An internal appeal was denied on May 23, 2012. (UBH 291-92)
A request for independent external review was made by the plaintiffs on November 19, 2012 and denied
on February 6, 2013. (ECF No. 49-10, pp. 1-4; UBH 256-59) In the November 19, 2012 letter to United
Behavioral Health Appeals Department requesting the independent external review, Plaintiffs’ counsel
also requested certain information. Relevant to the ERISA penalty claim, now before the Court, the
letter stated on the first page thereof:
I also hereby request, pursuant to applicable provisions of ERISA, a
full copy of the administrative record. Please note that this request for
the full record includes all documentation or other information in the
possession of the company relevant to the claim, including
specifically any information that was not used, not considered, or
rejected.
(ECF No. 49-30, p. 1)
Plaintiffs attach to their memorandum the defendants’ responses to their requests to admit as
follows:
2. Admit that the letter attached as Exhibit A, along with the
Affidavit of Whitfield Boyd, the Affidavit of Wayne Boyd, and a CD
containing medical records listed in that letter were received by UBH
via Federal Express on November 21, 2012.
RESPONSE: UBH admits that after a diligent search, UBH has
located the letter and the CD and therefore admits only that the
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addressee Optum Health Houston Appeals received these on November 26, 2012.
(ECF No. 45-2, p. 2-3)
Finally, the facts are uncontroverted that the plaintiffs did not receive a response to the
request for information.
Summary Judgment Standard
“The court shall grant summary judgment if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a)
(2010). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the record . . .; or (B) showing that the materials cited do
not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1).
When no genuine issue of any material fact exists, summary judgment is appropriate. See Shealy
v. Winston, 929 F.2d 1009, 1011 (4th Cir. 1991). The facts and inferences to be drawn from the
evidence must be viewed in the light most favorable to the non-moving party. Id. However, "the mere
existence of some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no genuine issue of material
fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
"Once the moving party has met [its] burden, the nonmoving party must come forward with
some evidence beyond the mere allegations contained in the pleadings to show that there is a genuine
issue for trial." Baber v. Hospital Corp. of Am., 977 F.2d 872, 874-75 (4th Cir. 1992). The nonmoving
party may not rely on beliefs, conjecture, unsupported speculation, or conclusory allegations to defeat
a motion for summary judgment. See Baber, 977 F.2d at 875. Rather, the nonmoving party is required

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to submit evidence of specific facts by way of affidavits, depositions, interrogatories, or admissions to
demonstrate the existence of a genuine and material factual issue for trial. Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986).
Applicable ERISA Law
Section 1132(c)(1) of Title 29 of the United States Code provides:
Any administrator . . . who fails or refuses to comply with a request
for any information which such administrator is required by this
subchapter to furnish to a participant or beneficiary (unless such
failure or refusal results from matters reasonably beyond the control
of the administrator) by mailing the material requested to the last
known address of the requesting participant or beneficiary within 30
days after such request may in the court's discretion be personally
liable to such participant or beneficiary in the amount of up to $100
a day from the date of such failure or refusal, and the court may in its
discretion order such other relief as it deems proper. (Emphasis added)
Pursuant to the Debt Collection Improvement Act of 1996, the amount of the penalty set forth
in the statute has been increased to $110 per day. 29 C.F.R. § 2575.502c-1.
ERISA’s statutory disclosure provisions require an administrator to provide participants or
beneficiaries with certain information.
The administrator shall, upon written request of any participant or
beneficiary, furnish a copy of the latest updated summary plan
description, plan description, and the latest annual report, any terminal
report, the bargaining agreement, trust agreement, contract, or other
instruments under which the plan is established or operated. The
administrator may make a reasonable charge to cover the cost of
furnishing such complete copies. The Secretary [of Labor] may by
regulation prescribe the maximum amount which will constitute a
reasonable charge under the preceding sentence.
29 U.S.C. § 1024(b)(4). See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 116 (1989),
citing H.R.Rep. No. 93-533, p. 11 (1973). (The purpose of the ERISA disclosure provisions is to
ensure that “the individual participant knows exactly where he stands with respect to the plan.”)
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The purpose of § 502(c)(1) is not to compensate participants for injuries,
but to punish noncompliance with ERISA. Daughtrey v. Honeywell, Inc.,
3 F.3d 1488, 1494 (11th Cir.1993). Accordingly, prejudice to the party
requesting the documents is not a prerequisite to the imposition of
penalties. See Moothart v. Bell, 21 F.3d 1499, 1506 (10th Cir.1994). But
prejudice is a factor that a district court may consider in deciding
whether to impose a penalty. Id. The district court may also consider
whether the administrator acted in bad faith. See Rodriguez–Abreu v.
Chase Manhattan Bank, N.A., 986 F.2d 580, 588 (1st Cir.1993).
Faircloth v. Lundy Packing Co., 91 F.3d 648, 659 (4th Cir. 1996).
The two most important factors guiding the discretion of the district court are prejudice to the
plaintiff and “the nature of the administrator’s conduct in responding to the participant’s request.”
Davis v. Featherstone, 97 F.3d 734, 738 (4th Cir. 1996). “Frustration, trouble, and expense”, including
the “trouble and expense” of hiring an attorney are relevant factors for the court’s consideration in
deciding whether to impose a penalty. Id.
Defendants contend that Plaintiffs failed to make a sufficiently specific request for documents
covered by the ERISA disclosure statute and, secondly, that they did not send their request to the entity
required by law to disclose information concerning the plan.
Specificity of Request
Defendants contend that the plaintiffs’ request for a full copy of the administrative record does
not constitute a specific request for documents falling within Section 1024(b)(4). They assert that the
documents referenced in Section 1024(b)(4) are the “formal or legal documents under which a plan is
set up or managed”, citing Faircloth, 91 F.3d at 653-54, and that the plaintiffs’ broad request did not
specify any of the documents mentioned in Section 1024(b)(4). Defendants also assert that, both
Section 1024 and Section 1132 are contained in Subchapter I of Chapter 18 of Title 29, and that
Congress did not intend to include documents referenced in regulations enacted pursuant to other

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subchapters in ERISA’s civil enforcement provision. See ECF No. 54, p.2, footnote 1. Plaintiffs
contend that their request was sufficiently broad to cover the plan document and summary plan
description, both of which are covered by the disclosure statute. They point particularly to their request
for “all documentation or other information in the possession of the company relevant to the claim .
. .” Plaintiffs rely upon Mullins v. AT&T Corp., 424 Fed. App’x 217 (4th Cir. 2011). In Mullins, the
plaintiffs requested a copy of the AT&T LTD policy and “a copy of all other plan documents
concerning [the LTD] policy.” Id. at 225. The Fourth Circuit held that this request was sufficient to
notify AT&T that the response should include the summary plan description.
In Faircloth, the Fourth Circuit rejected the approach of a panel of the Ninth Circuit2 that
Section 1024(b)(4) “encompasses documents other than those under which a plan is set up or
managed.” The Fourth Circuit found that the statutory language of Section 1024(b)(4) is clear and
unambiguous and that therefore it was not necessary to consult legislative history. The court cited
dictionary definitions of “instrument” as a formal or legal document and held that “the language ‘other
instruments under which the plan is established or operated’ encompasses formal or legal documents
under which a plan is set up or managed.” Faircloth, 91 F.3d at 653. The court also stated:
We note, however, that if Congress had intended § 104(b) to encompass
all documents that provide information about the plan and benefits,
Congress could have used language to that effect. Instead, Congress
used language limiting § 104(b)(4) to “instruments under which the plan
is established or operated.” The clear and unambiguous meaning of this
statutory language encompasses only formal or legal documents under
which a plan is set up or managed.
Id. at 654.
2

Hughes Salaried Retirees Action Comm. v. Adm'r of Hughes Non-Bargaining Ret. Plan, 39 F.3d 1002 (9th Cir.
1994), as amended (Feb. 13, 1995), opinion vacated on reh'g, 72 F.3d 686 (9th Cir. 1995).

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In Faircloth, the Fourth Circuit found that requests for the IRS determination letter for the
ESOP Plan, its bonding policy, and appraisal reports for stock and financial information did not relate
to setting up or managing the plan and were accordingly not covered by the ERISA disclosure
requirements. Regarding the meeting minutes of the ESOP, the court cited a DOL Advisory Opinion
which found that certain meeting minutes would fall under the statute, but held that it did not need to
decide whether meeting minutes could ever constitute formal or legal documents of the plan because
the request was too broad. The court did, however, hold that the funding and investment policies of
the plan were formal documents under which the ESOP was managed and that the request for these
policies by name was clear. The court cited with approval Anderson v. Flexel, Inc., 47 F.3d 243, 248
(7th Cir. 1995), “holding that a request for documents under § 104(b)(4) necessitates a response from
an administrator when it gives the administrator’ clear notice’ of the information sought.”
The Court will now turn to the question of whether the request by the plaintiffs in the case at
bar was sufficiently specific to give clear notice of a request for documents under which the plan is
established or operated. Plaintiffs assert that their request for the complete record, including “all
documentation or other information in the possession of the company relevant to the claim”
encompassed at least the plan and the summary plan description, which are included within Section
1024(b)(4). The Court disagrees. The broad requests for the administrative file and all documentation
relevant to the claim were not sufficiently clear to require the company to furnish the summary plan
description, the plan itself, and other governing documents so as to impose a penalty upon the company
for failing to furnish those documents. Unlike the request in Mullins, the request in the case at bar did
not specifically refer to plan documents. The Court accordingly finds that the plaintiffs’ request for “a
full copy of the administrative record” did not provide clear notice that they sought the SPD and the

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plan document and therefore the ERISA penalty provision does not apply.3
The plaintiffs also contend that the failure of the claims administrator to produce the claims file
should subject it to a statutory penalty because regulations define the term “relevant” broadly to
include documents demonstrating compliance with the administrative processes, and also those which
are “a statement of policy or guidance with respect to the plan. . .” 29 C.F.R. §§ 2560.503-1(m)(8).
Plaintiffs cite 29 U.S.C. § 1029(c), which provides that the Secretary of Labor may “prescribe the
format and content of . . . any other . . .documents . . .which are required to be furnished or made
available to plan participants and plan beneficiaries." In addition, they cite 29 C.F.R. §
2560.503-1(h)(2)(iii), stating that part of a full and fair review process is that the claims procedures
must provide that the claimant shall be provided, free of charge, with “all documents, records, and other
information relevant to the claimant’s claim for benefits. Whether a document, record, or other
information is relevant to a claim for benefits shall be determined by reference to paragraph (m)(8) of
this section.” Paragraph (m)(8) provides that documents are relevant when they were relied upon in
making the benefit determination,“[were] submitted, considered, or generated in the course of making
the benefit determination, demonstrate[] compliance with the administrative processes and safeguards
required pursuant to paragraph (b)(5) . . . or . . . in the case of a group health plan . . . constitutes a
statement of policy or guidance with respect to the plan concerning the denied treatment option or
benefit for the claimant’s diagnosis, without regard to whether such advice or statement was relied upon
in making the benefit determination.” 29 C.F.R. § 2560.503-1(m)(8).
The Court first finds that the plaintiffs’ requests were sufficiently clear to cover the claims file.
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The Court understands some of the plaintiffs’ frustrations concerning the difficulty in obtaining the plan
document, as referenced in counsel’s affidavit filed in support of the motion for discovery. See ECF No. 15-2. As a result,
the Court did take the unusual step of allowing limited discovery in an effort to remedy the situation, as allowed within the
confines of Fourth Circuit case law and federal statutes.

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However, the claims file is not covered by the ERISA disclosure statute. The regulations implementing
29 U.S.C. Section 1029(c) are found at 29 C.F.R. Section 2520.101-1 et seq. However, the regulation
cited by the plaintiffs is 29 C.F.R. Section 2560.503-1. The regulation cited by the plaintiff implements
29 U.S.C. Sections 1133 and 1135, and relates to claims procedures. Although this regulation does
require claims administrators to provide those appealing adverse claims determinations with claims
information, the failure to provide the claims information does not fall under the ERISA penalty statute.
This holding is consistent with Faircloth. See also, Anderson v. Reliance Standard Life Ins. Co., No.
WDQ-11-1188, 2013 WL 1190782 at *11 (D. Md. March 21, 2013) (Claim guidelines are not formal
or legal documents and therefore administrator was not liable for statutory penalty); Vincent v. Lucent
Technologies, Inc., 733 F.Supp.2d 729 (W.D.N.C. 2010) (No statutory damages awarded for failure to
disclose the entire administrative record)
Therefore, the Court finds that the failure to produce the claims file does not support the
imposition of a penalty.
Plan Administrator
The defendants contend that, even if the plaintiffs’ counsel’s requests were sufficiently clear
and were covered by the disclosure statute, the plaintiffs did not make their request to the proper entity.
Under the plan, Sysco is the plan administrator and United Behavioral Health is the claims
administrator for the mental health benefits. The plan defines “Plan Administrator” as “the Company
or its delegate.” (UBH 0876, ECF No. 49-28, p. 9) The plan defines “Claims Administrator”, regarding
benefits that are insured, as “the insurance company insuring the benefit, or its designee.” (UBH 0875,
ECF No. 49-28, p. 8) The Plan Administrator may delegate its duties . . . by . . . (c) Obtaining clerical,
accounting, claims administration, and actuarial assistance.” (UBH 885)

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The Summary Plan Description summarizes the powers and duties of the plan administrator as
follows:
The Plan Administrator has the discretionary authority to make all
determinations including, but not limited to, interpreting the Group
Benefit Plan and the Benefit Programs, prescribing applicable
procedures, determining eligibility for and the amount of benefits, and
authorizing benefit payments and gathering information necessary for
administering the Group Benefit Plan and the Benefit Programs. The
Plan Administrator may delegate any of these administrative duties
among one or more persons or entities, which it has done by retaining
claims administrators for certain of the Benefit Programs.

(ECF No. 49-1, p. 12, UBH 0012)
The insurance carriers “are responsible for administering the insured Benefit Programs.
Specifically, the insurance carriers have ultimate responsibility for (i) determining eligibility for and
the amount of any benefits payable under their respective insured Benefit Programs and (ii) prescribing
claims procedures to be followed and the claim forms to be used by employees pursuant to their
respective insured Benefit Programs.” (ECF No. 49-1, p. 13, UBH 0013) The ERISA penalty provision
applies to “[a]ny administrator . . . who fails or refuses to comply with a request for any information
which such administrator is required by this subchapter to furnish . . . ” 29 U.S.C. § 1132(c)(1).
ERISA defines “administrator” as “the person specifically so designated” by the plan. 29 U.S.C. §
1002(16)(A).
Sysco delegated the claims administration for the mental health benefits to UBH. However, the
parties have not cited any part of the plan indicating that it delegated its disclosure responsibilities.
This Court’s ruling is supported by the Fourth Circuit case of Coleman v. Nationwide Life Ins. Co., 969
F.2d 54 (4th Cir. 1992). In Coleman, the plaintiffs participated in a group health policy sponsored by
an employer, Roofing Concepts, Inc. Nationwide Life Insurance Company was the insurer. Plaintiffs
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argued that Nationwide breached its fiduciary duty in failing to fulfil the responsibility of providing
employees the summary plan description and notice of material modifications. The court held that
Roofing Concepts was the plan administrator and “as such, it bore the primary duty of notification with
regard to the plan participants. . . While it is true that an insurer will usually have administrative
responsibilities with respect to the review of claims under the policy, that does not give this court
license to ignore the statute’s definition of plan administrator and to impose on Nationwide the plan
administrator’s notification duties.” Id. at 62.
In the case at bar, the plaintiffs’ counsel sent the request for information to “Optum Health
Houston Appeals”. (Response to Request to Admit, ECF No. 45-2, p. 2) This was apparently the
address for appeals of an unfavorable claim decision. Sending the request for documents to Optum
does not give the plaintiffs the right to request imposition of a penalty. The claims responsibilities were
delegated but not the disclosure responsibilities.4 The defendants’ motion for summary judgment is
accordingly granted on this ground also.

Conclusion
For the foregoing reasons, the defendants’ [50] Motion for Summary Judgment is granted and
the plaintiffs’ [45] Motion for Summary Judgment is denied. This order pertains to the second claim
in the complaint. The Court will issue an order at a later time ruling on the parties’ cross motions for
judgment.

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The plaintiff’s reliance on Law v. Ernst & Young, 956 F.2d 364 (1st Cir. 1992) is misplaced. There, the plan
documents gave an internal committee of a firm the responsibility for providing information concerning the plan, but the
firm “in practice” performed the function. The court found that “[t]here was ample evidence here from which the district
court could conclude that (the firm) itself controlled the provision of information concerning Law’s ERISA plan.” Id. at
373.

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AND IT IS SO ORDERED.

September 3, 2015
Florence, SC

s/R. Bryan Harwell
R. Bryan Harwell
United States District Judge

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