Overview

OALJ has received many inquiries as to the form required for a hearing request/answer in ERISA proceedings. The regulations indicate, in essence, that a party must, when requesting a hearing on a § 502(c)(2) or § 502(i) penalty, include arguments opposing the proposed sanction supported by reference to specific circumstances or facts surrounding the basis for the PWBA's determination letter in a § 502(c)(2) case, or notice of intent to impose a § 502(i) penalty. That hearing request/answer must be filed within 30 days of service of PWBA's determination letter or notice intent respectively.

Below is a more detailed description of the regulatory requirements, and a sample request for hearing/answer in a § 502(c)(2). The format would be similar for a § 502(i) answer.

Regulatory provisions

Proceedings in ERISA cases before the Office of Administrative Law Judges, U.S. Department of Labor, are governed by the regulations at 29 C.F.R. Parts 2560 and 2570. OALJ's jurisdiction in ERISA cases is limited to appeals from PWBA-imposed civil money penalties for:

• Failure or refusal to file the annual report, ERISA § 502(c)(2), 29 U.S.C. § 1132(c)(2)
  • Procedural rules are at 29 C.F.R. §§ 2570.60 through 2570.71

• Prohibited transaction ERISA § 502(i), 29 U.S.C. § 1132(i)
  • Procedural rules are at 29 C.F.R. §§ 2570.1 through 2570.12

If a party wishes to request a hearing on a PWBA Notice of Determination letter imposing civil money penalties for a § 502(c)(2) violation, or on a Notice of Intent to impose a penalty for a § 502(i) violation, that party must file an "answer" to the letter or notice.

In the case of a § 502(c)(2) penalty, if an answer is not filed within 30 days of the date of service of the Notice of Determination, the Notice of Determination becomes the final order of the Department. 29 C.F.R. §§ 2560.502c-2(g) and (h); 2570.64. In the case of a § 502(i) violation, if an answer is not filed within 30 days of service of the "complaint" (in this context, the "complaint" would be the Department's notice of intent to impose a § 502(i) penalty), the right to appear and contest the allegations of the notice is deemed to be waived, and the facts as alleged in the notice are deemded admitted. The § 502(i) notice then automatically becomes the final order of the Secretary, unless the ALJ finds that there was defective service.

Both § 502(c)(2) and § 502(i) violation regulations define an "answer" by reference to OALJ's Rules of Practice provide at 29 C.F.R. § 18.5(d)(1). See §§ 2570.2(c) and 2570.61(c). Rule § 18.5(d)(1) provides:

(d) Content of answer--(1) Orders to show cause. Any person to whom an order to show cause has been directed and served shall respond to the same by filing an answer in writing. Arguments opposing the proposed sanction should be supported by reference to specific circumstances or facts surrounding the basis for the order to show cause.

Thus, in filing an answer, it is important that the answer is supported by reference to specific circumstances or facts surrounding the basis for PWBA's determination letter or notice.

[Note: The regulation at 29 C.F.R. § 2570.3(a) states an out-of-date address for the Chief Docket Clerk, Office of Administrative Law Judges. The present address is: 800 K Street, NW, Suite 400N, Washington, DC 20001].

This is a sample request for hearing/answer in a § 502(c)(2) case. The format would be similar for a § 502(i) request for hearing/answer. The form is only intended to provide litigants with an example of what an answer's form and format might look like. The content must be adjusted to fit the factual circumstances and regulatory violation at issue.

DATE:
CASE NO.: [ when filing an answer, the case number will not yet be known, so this can be left blank. OALJ will assign a case number upon docketing. A case number is equivalent to a docket number (see 29 C.F.R. § 2570.3(e)). ]

In the Matter of

U.S. DEPARTMENT OF LABOR,
PENSION AND WELFARE BENEFITS ADMINISTRATION
    Complainant

    v.

[NAME OF RESPONDENT (precise party against whom the Department is seeking to assess a civil sanction; may be the fiduciary rather than the company)]
    Respondent

    Respondent, [name of Respondent], by its undersigned attorneys, asserts as follows:

   1. Respondent is the plan sponsor and administrator of the [name of plan] (the "Plan").

   2. The Plan is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et. seq.

   3. By letter dated [ insert date of letter ], the Pension and Welfare Benefits Administration ("PWBA") of the United States Department of Labor notified Respondent of its intent to assess a penalty of $ [ insert amount of penalty ] in connection with [ insert description of nature of alleged violation ]. By letter dated [ insert date of letter ], Respondent timely filed a statemet of reasonable cause explaining [ insert description ]. By letter dated [ insert date of letter ], PWBA determined not to waive the penalty and assessed a penalty of $ [ insert amount of penalty ].

   4. This answer is filed pursuant to 29 C.F.R. § 2570.62 seeking the administrative hearing provided by 29 C.F.R. § 2560.502c-2(h) regarding PWBA's assessement of this penalty against Respondent.

   5. [ Insert explanations, legal defenses, etc. ]

   6. [ insert additional explanations, defenses, etc. (continue as needed) ]

   WHEREFORE, Respondent prays that the administrative law judge issue an order or orders:

   1. Adjudging and declaring that [ insert description of relief sought (e.g., penalty should not have been assessed) ].

   2. [ insert description of other or alternative forms of relief (e.g., reducation in penalty) ].

            Respectfully submitted,

            _______________________________
            [ insert name, address, phone numbers of attorney ]

[Insert date of answer ]

   I hereby certify that a copy of this Answer of Respondent was served by first-class United States mail, postage prepaid, this __ day of _____, 19__ on the following persons:

[ insert service list ]

            _______________________________
            [ insert name of certifier ]

DATE:
CASE NO.:

In the Matter of

U.S. DEPARTMENT OF LABOR,
PENSION AND WELFARE BENEFITS ADMINISTRATION
   Complainant

   v.

[NAME OF RESPONDENT (the fiduciary, not the company)]
   Respondent

   PLEASE TAKE NOTICE that the undersigned hereby appears in this proceeding on behalf of Respondent, [ insert name of Respondent ].

            Respectfully submitted,

            _______________________________
            [ insert name, address, phone numbers of attorney ]

[Insert date of answer ]

   I hereby certify that a copy of this Notice of Appearance was served by first-class United States mail, postage prepaid, this __ day of _____, 19__ on the following persons:

[ insert service list ]

            _______________________________
            [ insert name of certifier ]