## Facts

- Sharon Mondry participated in her employer American Family Mutual Insurance Company’s self-funded group health plan; her son Zev was a beneficiary.
- The plan’s Summary Plan Description (SPD) identified American Family as the plan administrator and stated that CIGNA administered claims.
- Zev received speech therapy; after eligibility for a public program ended, Mondry continued therapy through a private provider.
- CIGNA denied reimbursement, asserting the therapy was not covered because it was “educational or training” and “not restorative.”
- For about sixteen months, Mondry repeatedly requested the plan documents containing the language relied on to deny the claim.
- CIGNA and American Family provided only partial materials and did not timely provide the governing plan language.
- When the governing documents were produced, they revealed CIGNA had relied on provisions inconsistent with the plan’s controlling language, and the denial was improper.
- Mondry ultimately obtained the benefits, then sued under ERISA for (1) statutory penalties for failure to furnish requested documents and (2) equitable relief for fiduciary breaches based on misrepresentations and document handling.

## Issues

1. Whether a claims administrator (CIGNA) may be liable for statutory penalties for failure to furnish plan documents under ERISA § 502(c)(1), 29 U.S.C. § 1132(c)(1).
2. Whether the named plan administrator (American Family) breached its ERISA document-production duties and whether the district court properly rejected penalties.
3. Whether CIGNA acted as an ERISA fiduciary in interpreting the plan and communicating coverage decisions, and if so whether alleged misstatements and reliance on non-governing materials stated a claim for breach of fiduciary duty under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3).
4. Whether American Family could be liable under § 502(a)(3) for its own conduct or for failing to correct misrepresentations tied to the denial and document requests.

## Decision

- The Seventh Circuit affirmed dismissal of the § 1132(c)(1) claim against CIGNA because only the plan “administrator” is subject to those penalties and the SPD designated American Family as administrator.
- The court reversed summary judgment for American Family on the § 1132(c)(1) claim, holding the named administrator retained the statutory duty to furnish requested documents and the record permitted a finding of noncompliance.
- The court reversed dismissal of the § 1132(a)(3) fiduciary-breach claim against CIGNA, holding CIGNA plausibly acted as a fiduciary by exercising discretionary authority to interpret plan terms and decide claims, and could have misrepresented plan terms by relying on inconsistent materials while withholding governing documents.
- The court reversed in part as to American Family on § 1132(a)(3), holding American Family could face fiduciary liability related to the misrepresentations and document-request handling.
- The case was remanded for further proceedings, including reconsideration of discretionary penalties against American Family.

## Legal Principles

- ERISA § 1132(c)(1) penalties for failure to furnish requested documents may be imposed only on the plan “administrator” as defined by ERISA and designated in the plan documents.
- A named plan administrator does not avoid § 1132(c)(1) document-production duties by delegating claims administration to a third party.
- A claims administrator that exercises discretionary authority to interpret plan terms and pay or deny claims functions as an ERISA fiduciary for those activities and may be sued for fiduciary breach under § 1132(a)(3).
- A fiduciary may breach duties of loyalty and care by misrepresenting plan terms, denying benefits based on non-governing or inconsistent materials, or withholding governing plan documents after repeated requests.
- “Appropriate equitable relief” under § 1132(a)(3) may address harm caused by fiduciary breaches even if the participant later receives the underlying benefits.

## Conclusion

The Seventh Circuit held that only the named plan administrator may be assessed ERISA document-production penalties, but it revived potential penalty liability against American Family and allowed fiduciary-breach claims for misrepresentations and improper reliance on non-governing materials against both CIGNA and American Family, remanding for further proceedings.


Mondry v. Am. Fam. Mut. Ins. Co., 557 F.3d 781 (7th Cir. 2009)