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Seventh Circuit Rules that Benefit Denial Did Not Comply with ERISA Notice Requirements

The Seventh Circuit ruled that a pension plan?ÇÖs denial of disability retirement benefits failed to comply with the notice requirements of ERISA. The denial letter merely asserted that the plaintiff was not permanently disabled, and failed to (i) provide the specific reason for the adverse determination, (ii) reference the specific plan provision on which it was based, (iii) provide a description of any additional material required, (iv) provide reference to the criteria relied upon in making the adverse decision, and (v) include a statement of the plaintiff?ÇÖs right to bring a civil action. Due to this failure to comply with ERISA?ÇÖs notice requirements, the court remanded the case back to the plan to determine, de novo, whether the plaintiff was entitled to disability benefits. The case illustrates the importance of carefully following ERISA?ÇÖs procedures in drafting claim denial letters. Kough v. Teamsters?ÇÖ Local 301 Pension Plan, No. 1:06-cv-05235 (7th Cir.… Continue Reading

Seventh Circuit Affirms No Penalties for COBRA Failures Discovered and Corrected Internally

The U.S. Court of Appeals for the Seventh Circuit affirmed a district court?ÇÖs denial of statutory penalties for an employer?ÇÖs failure to provide timely COBRA election notices. During an annual internal audit, the employer discovered that it failed to provide COBRA election notices to two employees. To correct this failure, the employer sent the notices to each employee along with an offer to retroactively elect COBRA. The employees did not take the offer and instead sued for statutory penalties. In affirming the district court?ÇÖs denial of statutory penalties, the Seventh Circuit found that there was no evidence of bad faith or gross negligence on the part of the employer. In addition, the court rejected the employees?ÇÖ argument that the employer was, as a matter of law, required to have an oversight system in place to ensure that COBRA notices reach all qualified beneficiaries on time. Although this decision was ultimately… Continue Reading

September 2011