You are working hard to administer your benefit plan in accordance with all the requirements of ERISA and the Code when you receive a written request for “a copy of the bargaining agreement, trust agreement, contract or other instrument under which the plan is established or operated.” This language is directly from Section 104(b)(4) of ERISA, but does that mean you have to provide a copy of the long, detailed and sometimes confidential service provider agreement? With ERISA penalties looming, this issue can become increasingly important in contentious disputes over plan administration. Although many courts do not require disclosure of these contracts, whether a service provider’s contract needs to be disclosed is an unanswered question to pay attention to.
Several courts don’t require disclosure of service provider contracts because they simply don’t govern the relationship between the plan participant and the provider. For example, the Ninth Circuit determined a service provider contract doesn’t need to be disclosed under Section 104(b)(4) for that very reason. Similarly, the District of New Jersey found no penalty for refusing to provide a service provider’s contract because it wasn’t “a legal document that (1) describes the terms of the plan or its financial status, or (2) otherwise restricts or governs the Plan’s operation.”
But It Depends
This is not an across the board rule followed by every court in every case, however. The Seventh Circuit, for example, required disclosure of a claims administration agreement because the contract “identified the respective authority and obligations of American Family and CIGNA with respect to the plan.” Other courts have avoided determining as a matter of law that a service provider’s contract is not subject to disclosure because the terms of the contract could affect the plan participant’s rights. Therefore, unlike the Ninth Circuit and the District of New Jersey, these courts recognized that there can be times where a service provider contract does impact a plan’s operation.
You Must Read It
The tension in these decisions leads to one conclusion—you probably should read the service provider contract before determining whether disclosure is required. The Eastern District of Missouri essentially reached this conclusion in requiring disclosure of a service provider’s contract. There, disclosure was required because the terms of the contract granted discretion to determine eligibility for benefits or interpret the terms of the plan document. Although the court recognized that a service provider’s contract is not a formal plan document because it “merely memorialized the obligations” of the contracting parties, the administrative services agreement was subject to disclosure because, unlike decisions that don’t require disclosure, the contract had a term “that purports to grant discretion and authority from AIG Inc. to Defendant DRMS to determine eligibility for benefits and construe and interpret all terms and provision of the Group Insurance Policy.” Notably, the Eastern District of Missouri reached this conclusion despite the fact that the 8th Circuit generally limits disclosure under Section 104(b)(4) only to “formal documents that establish or govern the plan.”
In short, the question of whether disclosure of service provider contracts is required doesn’t have an easy answer because it most likely will ultimately come down to the terms of the contract itself.