MHPAEA: $32,000 in ERISA Penalties for Failure to Provide Plan Documents

The complexities surrounding compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA) and the Employee Retirement Income Security Act (ERISA) may seem daunting for benefit professionals. A recent case in Montana has highlighted the critical importance of understanding and adhering to these regulations, particularly concerning the provision of requested plan documents. This case underscores the vital role of compliance and diligence in benefit administration.

Understanding the Montana District Court Case

In a significant ruling, a Montana district court awarded over $32,000 in ERISA document penalties to claimants after a third-party administrator failed to furnish MHPAEA-related plan documents upon request.
The court found that the failure to provide the requested documents hindered the claimants’ ability to understand their rights under MHPAEA and ERISA. This violation highlights the critical need for administrators to supply all required documentation promptly and comprehensively.
Remember, ERISA requires plan administrators to timely provide certain plan-related documents on request by a participant or beneficiary, including the latest updated:

  • Summary plan description (SPD),
  • Latest annual report, any terminal report, bargaining agreement, trust agreement, contract or, as relevant in this case, “other instruments under which the plan is established or operated” (ERISA § 104(b)(4) (29 U.S.C. § 1024(b)(4))

Failure to Disclose Requested Documents Violates ERISA

The successful portion of the claimant’s case was the claimants’ request for specific documents, including medical necessity criteria for various care facilities and information on processes and standards used in applying non-quantitative treatment limitations (NQTLs) to medical and mental health benefits. The court determined that these documents were essential for the claimants to understand their rights and obligations under the health plan.
Applying the MHPAEA regulations’ definition, the court concluded that the requested documents fell under ERISA’s disclosure requirements. Consequently, the failure to provide these documents constituted a violation of ERISA, emphasizing the importance of compliance for plan administrators.

ERISA Penalties as a Remedy

ERISA allows district courts to impose penalties of up to $110 per day if a plan administrator fails to provide certain documents within 30 days of a written request. In this case, the court deemed penalties appropriate despite the claimants not prevailing on their benefits or MHPAEA claims.
The administrator’s failure to disclose the documents impeded the claimants’ ability to understand and protect their rights under MHPAEA and ERISA. Thus, the court imposed a penalty of $110 per day for 294 days, totaling $32,340. This ruling should serve as a reminder of the potential financial consequences of non-compliance. While $32,340 may not seem like a sizeable sum to some organizations, it is important the cost in attorneys’ fees to manage action and the cost to the organization’s brand.

Key Takeaways for Benefit Professionals

Importance of Timely Document Disclosure

  • One of the critical lessons from this case is the necessity of timely and thorough document disclosure.
  • Benefit administrators must ensure that requested documents are provided promptly to avoid penalties and ensure compliance with MHPAEA and ERISA requirements.

Understanding MHPAEA Regulations

  • MHPAEA imposes expanded disclosure requirements on plans and insurers, including providing information on plan procedures and standards regarding mental health and substance use disorder (MH/SUD) benefits.
  • Familiarity with these regulations is crucial for benefit professionals to ensure compliance and avoid legal repercussions.

Implementing Robust Compliance Strategies

  • Benefit professionals should implement robust compliance strategies to manage disclosure requirements effectively.
  • This includes maintaining accurate and up-to-date records, training staff on regulatory obligations, and conducting regular audits to identify and address potential compliance issues.

Practical Steps to Ensure Compliance

Conduct Training Sessions

  • Training sessions for staff can help ensure that everyone involved in benefits administration understands the requirements of MHPAEA and ERISA.
  • Keeping abreast of regulatory updates and best practices can prevent inadvertent violations.

Maintain Comprehensive Records

  • Maintaining comprehensive and accessible records of all plan-related documents is essential. This ensures that requested documents can be provided promptly, reducing the risk of penalties.

If you are looking to deepen your understanding and enhance yourcompliance efforts, schedule a consultation with our team of experts at!

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