Jottings By An Employer's Lawyer

Tuesday, July 24, 2007

Tighten Up the Mailroom Procedures When Mailing Benefit Changes - 5th Circuit Says


Actually, the 5th Circuit didn't quite say it, but that's the message I got from today's opinion in Custer v. Murhpy Oil (5th Cir. 7/24/07). An employer's summary judgment was reversed on the issue of whether it complied with ERISA because it could not show proof, either direct or indirect, that notice of a change in benefits was actually mailed. The benefits department could show that they stuffed the envelopes with the notice and delivered them to the mail room, where they were to be addressed and mailed.

Unfortunately, the mail room personnel:

stated that the mail room does not keep, as a matter of practice, any records, reports, codes, or memoranda concerning what it sends out; the mail room does not know the contents of sealed envelopes received from the Benefits Department; and the computers and printers that would have been used to produce the lists to address the envelopes were discarded in February 2006. [The mailroom employees] provided no evidence, either physical or testimonial, to support Smith’s claim that the notices had been properly addressed and sent.

In light of testimony by four other employees that they did not recall having received the notice of change, the Court found a fact question existed.

Although disappointing to the Company, the Court did make it clear that even if the plaintiff could establish a violation of the notification rules of ERISA, the Court was not addressing the more difficult question over which their fellow circuit courts are split — what remedy if any would be available.

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