In a previous blog post, we provided an overview concerning whether plan service provider agreements may be required to be disclosed to participants under Section 104(b)(4) of ERISA. A recent district court decision in California puts a renewed spotlight on this issue for employers and plan administrators who may receive these types of document requests. In Zavislak v. Netflix, Inc., 2024 U.S. Dist. LEXIS 17427, (N.D. Cal. Jan. 31, 2024), the court held that the plan administrator of a health plan was not required to provide a participant with copies of various service provider agreements. 

While the Zavislak decision provides a detailed analysis of the topic, the issue of whether service provider agreements must be disclosed remains unsettled across other jurisdictions. Accordingly, plan administrators who receive such requests should consider the extent to which such agreements must be provided based on case law in the applicable jurisdiction.

Statutory Framework

Section 104(b)(4) of ERISA requires a plan administrator to furnish copies of specific plan documents within 30 days after receiving a written request from a participant or beneficiary. The specified documents that must be provided upon request include the latest updated summary plan description, the latest annual report, any terminal report, the bargaining agreement, trust agreement, and documents that fall within a “catch-all” of “other instruments under which the plan is established or operated.” 

Courts are authorized, in their discretion, to impose penalties of up to $110 for each day that the requested documents are not provided within 30 days. 

A Varied Approach by Courts

 The scope of the statute’s “catch-all” provision remains unsettled. In particular, courts have taken a varied approach as to whether service provider agreements are “instruments under which the plan is established or operated” and must be disclosed. Some courts do not require disclosure of service provider agreements and other plan-related documents that do not govern the relationship between the plan participant and the employer.[1] Other courts have taken a more expansive approach to disclosure on the basis that there can be times where a service provider agreement does impact a plan’s operation. For instance, the District of Utah required disclosure of a claims administration agreement because the agreement “detail[ed] the division of responsibilities between the Plan Administrator and the Claims Administrator.”[2]

Zavislak Decision

In Zavislak, the district court addressed whether a plan administrator should be assessed statutory penalties for failing to provide various documents requested by a plan beneficiary, including service provider agreements. In the case, the plaintiff made her initial request in January 2021, but the company’s benefits manager did not receive it, as employees were working from home during the COVID pandemic. A month later, the plaintiff sent a second request for documents. The employer responded but withheld several categories of documents.

The Court analyzed four categories of documents and found that they were not required to be produced:

  • Administrative services agreements. The court concluded that the employer’s services agreements between the plan and its third-party administrators (“TPAs”) were not required to be disclosed to plan participants because such agreements “governed only the relationship between the plan provider and claims administrator, and not the relationship between the plan participants and the provider.” Zavislak, 2024 U.S. Dist. LEXIS 17427, at *68-69. In addition, the court noted that while one of the services agreements provided information about claims and appeals deadlines, that information was separately provided to participants in other benefit disclosures. 
  • The TPA’s internal documents (e.g., plan matrices and similar documents). The plaintiff argued that he should have been provided a “plan matrix” maintained by the TPA that kept track of clients’ various benefits. The court concluded that the TPA’s matrix was an internal document that did not govern the plan.
  • Documents incorporated into SPD. The court addressed whether two documents that were incorporated by reference in the plan’s SPD—a preventive care guide and a prior authorization list—were required to be disclosed. The court concluded that because the plaintiff had received copies of both documents free of charge once he contacted the TPA to request them (a procedure that was outlined in the SPD), these documents were not improperly withheld.
  • The TPA’s Medical Management Form and other internal documents. The court determined that a medical management form, utilization review process document, and other related documents used by the TPA for its internal purposes did not need to be disclosed because the documents did not govern the plan.

Finally, the Court held that draft versions of SPDs for the Plan did not need to be produced because the administrator is only required to provide the “currently operative, governing plan documents” at the time of the request.

The Court ultimately imposed a reduced penalty of $6,465 on the employer ($15 per day for 431 days between the date of the request and the date of production of certain documents that the employer was required to provide). The $15 rate was reduced from $110 due to the “exceptional circumstances” accompanying the COVID-19 pandemic as well as lack of bad faith on the employer’s part. 

Takeaways

The Zavislak decision is one of the most detailed analyses by a court on the scope of ERISA Section 104(b)(4). As such, it is likely that Zavislak will be cited by both litigants and courts in similar disputes involving participant requests for documents, including service provider agreements. Nevertheless, the legal issue of whether service provider agreements must be disclosed remains unsettled. Plan administrators who receive such requests should consider the extent to which agreements must be provided based on case law in the applicable jurisdiction. As part of this analysis, plan administrators will likely need to review the terms of the agreement. 

Also, the litigation over the propriety of the employer’s response to a document request lasted nearly three years and almost went to trial. The district court issued a 63-page written opinion. The sheer effort that went into litigating and adjudicating this dispute is remarkable. It highlights the need for employers to take ERISA document requests seriously. Failure to do so can be costly.

[1] See, e.g., Hively v. BBA Aviation Benefit Plan, 2007 U.S. Dist. LEXIS 119348 (June 27, 2007), aff’d, 331 F. App’x 510, 511 (9th Cir. 2009) (holding that service agreement “does not fall within the scope of § 1024(b)(4) because it does not establish any rights of Plan participants and beneficiaries, and relates ‘only to the manner in which the plan is operated.’”); Morley v. Avaya Inc. Long Term Disability Plan For Salaried Employees, 2006 U.S. Dist. LEXIS 53720, at *18-19 (Aug. 3, 2006) (holding that a services agreement “between the Plan and the Claims Administrator as to each party’s respective duties and obligations . . . is not a plan document or a document ‘under which the plan is established or operated” under ERISA § 104(b)(4)).

[2] M. S. v. Premera Blue Cross, 553 F. Supp. 3d 1000, 1036-40 (D. Utah 2021). See also Mondry v. Am. Family Mut. Ins. Co., 557 F.3d 781, 796 (7th Cir. 2009) (similar).