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E-mail This PageUSDOL, PWBA v. Northwestern Institute of Psychiatry, 1993-RIS-23 (PWBA July 26, 1995)
Date: July 26, 1995
Case No.: 93-RIS-23
In the Matter of:
U.S. DEPARTMENT OF LABOR,
PENSION AND WELFARE BENEFITS
ADMINISTRATION,
Complainant-Appellee
v.
NORTHWESTERN INSTITUTE OF
PSYCHIATRY
Respondent-Appellant
DECISION AND ORDER
This proceeding is on appeal from the United States
Department of Labor (hereinafter "the Department" or "DOL")
Office of Administrative Law Judges ("ALJ") , and arises under
Sections 2, 101, 103, 104, 502 (c) (2) and 505 of the Employee
Retirement Income Security Act of 1974 (ERISA) , as amended (29
U.S.C. Sec. 1001, 1021, 1023, 1024, 1132 (c) (2) and 1135) , and
the implementing regulations at 29 CFR 2520.103, 2520.104a-5,
2560.502c-2, and 2570.60 - 2570.71.
BACKGROUND
This case involves the question of the validity of civil
penalties levied as a result of alleged deficiencies in the
filing of the 1988 Form 5500 for the Northwestern Institute of
Psychiatry (NIP) Pension Plan ("Plan") . In order to understand
the legal issues raised here, a brief summary of the relevant
facts is in order.
On January 10, 1990, through its third party administrator,
TYCOR Benefit Administrators, Inc., NIP filed a Form 5500 with
the Internal Revenue Service (IRS) for the NIP Plan year ended
March 31, 1989.
[PAGE 2]
By letter dated February 14, 1990, the IRS informed NIP of
certain deficiencies in the Form 5500. The deficiencies relevant
to this case were missing Schedules B and C and a missing report
of an Independent Qualified Public Accountant (IQPA) The IRS
warned NIP that, if the deficiencies were not timely corrected,
NIP would be subject to certain penalties under the tax law and
might also be subject to DOL penalties of up to ,000 per day.
On February 28, 1990, NIP forwarded to the IRS certain
corrections to the Form 5500 Schedule C, an explanation of why it
thought Schedule B was not necessary, and a statement that the
IQPA's opinion letter "is currently being prepared and will be
forwarded to you when completed."
The IRS sent NIP a second deficiency letter on March 20,
1990, noting that Schedule. B and the IQPA's opinion was still
missing, and that some information was missing from the Schedule
C that was provided, and reiterated the penalties which could be
levied by the IRS and the DOL if the missing items were not
provided in a timely manner and requested a response within 30
days of the date of the letter[1] .
NIP did not respond to the March 20, 1990, letter. The IRS
then sent NIP its third letter on May 21, 1990, again giving it
30 days to correct deficiencies, and reiterating the potential
IRS and DOL penalties NIP could be subject to if it failed to
correct the deficiencies.
NIP replied under cover of a letter dated June 6, 1990[2]
transmitting some (but not all) of the missing information from
the Schedule C, but not transmitting Schedule B and stating that
the IQPA's opinion letter was delayed "due to lack of information
that needs to be submitted from the insurance carrier that was
dismissed during the plan year" and stated that the opinion
letter would be sent "under separate cover" when it was received.
Four months later, on October 26, 1990, the DOL sent NIP a
notice of rejection of NIP's 1988 annual report, citing the lack
of an IQPA opinion, the absence of Schedule B and the need to
provide certain information on Schedule C. The letter contained a
warning to NIP, under the heading "Notice of Intent to Assess a
Penalty" that "unless a revised report satisfactory to the
Department is filed within 45 days of the date of this Notice of
Rejection", the Department could treat the report as not having
been filed and could levy a penalty of up to , 000 per day from
the date on which the annual report was due.
[PAGE 3]
NIP responded to the DOL by letter dated November 8, 1990[3]
. The response included an amended Form 5500 dated November 21,
1990, along with a completed IQPA's report and stated that, " if
additional information is required, please contact my pension
administrators at the TYCOR Benefit Administrators..."
Curiously, the IQPA's opinion letter was dated April 16, 1990,
even though NIP's June 20 letter stated that the IQPA's opinion
letter was not yet prepared.
On March 15, 1991, the DOL formally 'notified NIP of its
intent to assess a penalty for the continued deficiencies in NIP
plan's 1988 annual return because NIP had failed to make a
revised filing satisfactory to the DOL within 45 days of the
Notice of Rejection.
The Notice of Intent notified NIP that the IQPA report
received in response to the Notice of Rejection was deficient
because it did not present the statement of net assets in
comparative format, as required by regulation 29 CFR 2520.103-
1(b)(2)(i). It also stated that the IQPA report was deficient
because it did not extend to the required separate schedules of
assets held for investment and of reportable transactions as
required by 29 CFR 2520.103-1(b)(5)(iii)(A), because the Plan had
not prepared and included these schedules. The Notice of Intent
also requested that the schedules of assets held for investment
and of reportable transactions be attached, as required by
regulation 29 CFR 2520.103-10. The Notice of Intent informed NIP
that a penalty of $36,500 had been calculated for the missing
financial reporting items (the schedules) , and a penalty of $50,
000 had been calculated for the deficient accountant's report.
This Notice also informed the plan administrator that he had 30
days from service of the Notice to file a written statement of
reasonable cause setting forth all the facts alleged for failure
to file a complete annual report or why the penalty, as
calculated, should not be assessed. The Notice stated that the
statement must contain a declaration that the statement is made
under the penalties of perjury.
TYCOR responded to the Notice of Intent by letter dated
April 12, 1991. This letter enclosed the Statement of Net Assets
in comparative format, a Schedule of Assets Held for Investment,
and a Schedule of Reportable Transactions, along with another
copy of the previously submitted IQPA's opinion. The IQPA's
opinion had not been amended to extend to the separate schedules,
even though the DOL's March 15, 1991 notice explicitly stated
that applicable Department regulations "requires that the opinion
of the IQPA extend to the information covered in the separate
[PAGE 4]
schedules." Further, the letter did not state any reasonable
cause for NIP's failure to timely file a complete annual report
or why the penalty should not be assessed. Finally, despite
being required to do so by. applicable regulations and by
instructions contained in the DOL's notice, TYCOR, filing on
behalf of NIP, failed to declare. that the statements made in its
April 12, 1991 letter were made under the penalties of perjury.
On September 10, 1991, the DOL sent NIP a "Notice of Penalty
Assessment", reciting the deficiencies contained in the filed
Annual Report and stating that the April 21, 1991 letter sent by
NIP in response to the DOL's Notice of Intent to Assess a Penalty
was not a timely statement of reasonable cause because it "did
not contain a declaration that it was made under penalties of
perjury, as required under 29 CFR section 2560.502c-2(e) as cited
in the Notice." The DOL's Notice of Penalty Assessment further
stated that such failure to file a timely statement of reasonable
cause was deemed to constitute a waiver of NIP's right to contest
the facts alleged in the Notice of Intent to Assess a Penalty,
which had now become a final order.
In response to a collection letter sent to NIP by the DOL on
October 11, 1991, NIP sent a letter to the DOL dated October 21,
1991, requesting that the DOL "waive all penalties associated
with the 3/31/89 filing, since we are enclosing a satisfactory
report in compliance with the letters that we've received from
your office." However, this letter enclosed an unsigned Form
5500, with the same deficient IQPA's report that had been
submitted to the DOL twice previously.
In mid January, 1992 NIP did two things of import. on
January 16, 1992, it filed suit in District Court for the Eastern
District of Pennsylvania, alleging that the Department's failure
to consider NIP's letter of April 12, 1991, as a timely statement
of reasonable cause unfairly deprived it of its rights to an
administrative appeal. On January 17, 1992, NIP filed a signed
Form 5500, accompanied by the appropriate schedules, along with a
signed IQPA's report which, for the first time, extended to the
supplemental schedules of assets and reportable transactions.
On November 23, 1992[4] , NIP filed NIP Plan's Form 5500
for the 1988 plan year with the Department under the Department's
Grace Period Program.
On February 24, 1993, the District Court rendered judgment
for NIP, holding that the Department's position that the failure
by NIP to sign a declaration that its reasonable cause statement
[PAGE 5]
was being made under penalty of perjury constituted a waiver of
NIP's right to a review of NIP's otherwise timely filed statement
of reasonable cause was arbitrary and capricious. The court
ordered that NIP amend its April 12, 1991 reasonable cause
statement within 10 days of the order to include a declaration
that it was made under penalties of perjury and that the DOL
issue a determination evaluating NIP's reasonable cause statement
within 30 days of the filing by NIP of the declaration that its
reasonable statement was made under penalties of perjury.
On March 5, 1993, NIP's attorneys filed a statement of
reasonable cause dated March 4, 1993, signed by NIP under
penalties of perjury, which contained new assertions of
reasonable cause, essentially to the effect that: (1) NIP relied
on its accountants and third party administrator who "held
themselves out as eminently qualified" certified public
accountants and pension administration service providers,
respectively, and (2) that NIP believed that the prior filings
satisfied the Department's needs, and in any event, they came
into compliance on January 17, 1992. It concluded, in relevant
part, that "we reasonably relied in good faith on professional
accountants and pension administrators to perform their
obligations in accordance with applicable law. Thus, no penalty
should be assessed against Northwestern."
On April 7, 1993, the Department issued a Notice of
Determination of Reasonable Cause. Based upon NIP's statement of
reasonable cause, DOL found reasonable cause to waive (75%) of
the assessed penalty because:
"1. The 1988 plan year filing has finally been brought into
compliance with applicable requirements; and
2. the plan administrator has expended considerable effort
to have his Statement of Reasonable Cause considered."
However, the DOL also found that there was no reasonable
cause to waive the other 25% because (1) the plan administrator
failed to present a satisfactory reasonable cause for its
original failure to file a satisfactory annual report or for its
failure to file a correct report within 45 days of the Notice of
Rejection; (2) the mistaken reliance on professional accountants
and pension does not constitute reasonable administration service
providers does not constitute reasonable cause, as administrators
have a fiduciary duty to ensure that service providers are
performing properly; (3) the administrator failed to file a
correct report for nearly one year after the Notice of Rejection;
[PAGE 6]
and (4) the lack of substance to the first statement of
reasonable cause.
Northwestern timely filed an appeal on April 27, 1993 of
this Determination to the DOL's Office of Administrative Law
Judges.
On June 17, 1993, PWBA issued a correction to its April 7,
1993 Notice of Determination, stating that an acceptable IQPA
report was not received until January 28, 1992.
By Decision and Order dated December 21, 1993, Ainsworth H.
Brown, the ALJ assigned to this case, ruled in favor of the DOL
and upheld the $21,625 penalty against NIP.
The ALJ found that NIP did not file a correct Form 5500
until over two years after it was due to be filed under section
104 of ERISA. He further found that the IRS and DOL sent NIP "no
less than six letters outlining deficiencies in the Form 5500"
and that, "even after receiving the Notice of Rejection from the
DOL on October 26, 1990, in which NIP was given 45 days to
correct any errors, it took over one year for NIP to file a
complete report[5] ."
The ALJ found that "the DOL afforded NIP every opportunity
under law to correct and explain the errors" in the NIP Plan's
1988 Form 5500, that the penalty assessed was reasonable, and
that "the evidence demonstrates that the DOL has fully considered
the statement of reasonable cause dated March 4, 1993, and has
adjusted the penalty to be assessed accordingly."
The ALJ rejected NIP's argument that the maximum penalty it is
subject to is ,000 based on its filing of November 23, 1992
under the Annual Report Grace Period announced by the DOL on
April 20, 1992 (57 Fed. Reg. 14437) . The ALJ noted that "there
are separate penalties for failure to file timely as opposed to
penalties for non-compliance with reporting requirements", and
that "the penalties sought to be assessed by the DOL are directly
related to filing deficiencies... and are unrelated to the
lateness of the filing."
The ALJ rejected NIP's argument that the DOL's acceptance
and cashing of the ,000 check as part of the Grace Period
filing was in accord and satisfaction of the penalty, stating
that NIP failed to show that there was a "mutual agreement"
relating to a "bona fide dispute."
Similarly, the ALJ rejected NIP's arguments that there was
[PAGE 7]
legal significance to the statement in the DOL's April 7, 1993
letter that an acceptable IQPA report was submitted on October
21, 1991 and that, once an appeal to the ALJ was filed the DOL
was without jurisdiction to issue a correction letter on June 17,
1993, which stated that an acceptable IQPA report not received
until January 28, 1992. The court noted that the June 17, 1993
letter "did not effect (sic) the rights of the parties in any
material way because NIP had reached its statutory maximum for
the violations sought to be enforced months before the date in
either letter."
Finally, the ALJ stated that "considering the extraordinary
length of time that transpired before NIP filed a complete Form
5500 and the severity of the omissions, including the absence of
a proper IQPA opinion letter, the Court could find no basis to
set aside the DOL assessment of penalty or its subsequent
modification."
The ALJ ordered NIP to pay DOL $21,625, less a credit of
,000 for the payment which NIP made under the Grace Period
program.
NIP appealed from the ALJ decision and order, on four
grounds: First, that the ALJ erred as a matter of law by failing
to grant NIP summary judgment for its filing under the DOL's
Grace Period filing program; second, that the ALJ erred as a
matter of law by failing to grant NIP summary judgment based on
DOLI s admission that NIP filed in a timely manner; and finally,
in any event, the ALJ erred in granting summary judgment because
issues of fact existed as to whether NIP substantially complied
with its filing duties and as to whether NIP presented reasonable
cause to justify a full abatement of DOL's penalty. I shall deal
with the issues raised by NIP's appeal in turn.
NIP's CONTENTION THAT THE ALJ ERRED AS A MATTER OF LAW BY
FAILING TO GRANT NIP SUMMARY JUDGMENT FOR ITS FILING UNDER DOL's
GRACE PERIOD FILING PROGRAM.
NIP's argument, briefly summarized, is that the DOL's Grace
Period program was open to it, that it properly availed itself of
the program, and that even if it were not properly open to it,
the DOL, by accepting and negotiating NIP's ,000 check, entered
into an accord and satisfaction of the penalty and was estopped
from preventing entry of NIP into the Grace Period program.
The thrust of NIP's argument that the Grace Period program
was properly available to it can be briefly summarized as
follows:
[PAGE 8]
Technically, under section 502(c)(2) of ERISA, an annual
report that is rejected under 104 (a) (4) is to be treated
as not having been filed. Because NIP's report was so
rejected, NIP was a nonfiler and therefore eligible under
the Grace Period program for late and non-filers, as
promulgated in the DOL's April 20, 1992 notice in the
Federal Register as extended by its July 24, 1992 Federal
Register notice to plan administrators who filed late annual
reports prior to the effective date of the program.
The ALJ rejected this argument in his opinion, citing the
following language of DOL's April 20, 1992 notice:
"Annual reports received during the Grace Period are subject
to the usual edit checks. Plan administrators will be given
an opportunity to correct deficiencies, in accordance with
the procedures contained in the regulations located at 29
C.F.R. section 2560.502c-2 and 2570.60 et seq.
However, uncorrected deficiencies may result in the
assessment of further penalties."
NIP argues, correctly, in my view, that the above language
in the April 20, 1992 notice relates to possible deficiencies in
annual reports received in response to the notice. However, NIP
totally ignores the following language in the July 24, 1992
notice, which extended the program to late filers (such as NIP)
who had filed prior to the effective date of the program:
"The Department notes that the payment of the foregoing
civil penalties only serves to avoid the assessment of
otherwise applicable higher civil penalties for filing late
annual return/reports. Payment of such penalties does not
serve to reduce, abate, or otherwise mitigate civil
penalties which may be or have been assessed for annual
reports which are determined to be deficient." 57 Fed. Reg.
33020
This language makes abundantly clear that the Grace Period
program does not extend to situations such as this, in which
civil penalties had been assessed in September 1991 for an annual
report which was determined to be deficient. Furthermore, both
the April 20, 1992 and July 24, 1992 notices explicitly state
that they are applicable to plan administrators who "voluntarily
file" overdue annual reports. Under the facts of this case,
where NIP consistently failed to provide the DOL with the
information was necessary under the applicable regulations to
have a non-deficient annual report, and was in the midst of
[PAGE 9]
litigation with the DOL with respect to the DOL's penalty
determination, the filing cannot be considered voluntary in the
manner meant in the regulation, using the ordinary meaning of the
word -- namely, "acting or done without compulsion or obligation"
-- that is, the compulsion or obligation of being found out by
the DOL to have filed a deficient return. Rather than being a
voluntary coming forth, this was a legal ploy of NIP to try to
abort the DOLI s previously levied penalty for noncompliance with
the DOL's reporting requirements.
The NIP's argument that the DOL's acceptance of its filing
under the Grace Period program somehow constituted an accord and
satisfaction of its debt or constituted an estoppel of the DOL's
claims for deficiencies similarly does not survive even cursory
scrutiny. The legal standard for accord and satisfaction cited
in NIP's brief is "when a debtor sends a check for less that the
amount claimed, clearly expressing his intention that it is sent
as a settlement in full and not in part payment, 'retention and
use of the money or the cashing of the check is almost always
held to be an acceptance of the offer operating as full
satisfaction'[6] ." However, an examination of plaintiff's
letter, enclosing the check, clearly shows that there was no
clear expression of an intention that the payment was meant to be
settlement in full of an outstanding claim. Indeed, it was not
directed to the officials at the DOL who were dealing with NIP
with respect to the penalty assessment; it made no reference to
the penalty assessment; and made no statement that the filing and
payment of $1000 was meant to be settlement in full of the
penalty assessment. Rather it was a bland cover letter to a post
office box number, under a program which received thousands of
filings. The letter gives no indication that there was an
outstanding dispute or that the payment was meant to be in full
satisfaction of the dispute[7] . I therefore find that the DOL's
acceptance of NIP's check did not effectuate an accord and
satisfaction. Furthermore, acceptance by, the DOL of NIP's check
did not estop the DOL from. denying NIP's, eligibility for the
Grace Period program, given the clear language in the July 24,
1992 Federal Register Notice stating that payment of penalties
under the program would not "reduce, abate or otherwise mitigate
civil penalties which... have been assessed for annual reports
which are determined to be deficient". Furthermore, it appears
that NIP was repeatedly informed by the DOL that it was not
eligible for the Grace Period program[8] . Given the facts,
DOL's acceptance and retention of NIP's check was merely the
partial collection of a debt owed. "(I] t is clear that the
Government has the same right as any other creditor to apply
monies of his debtor, in his hands, in extinguishment of debts
due him. See
[PAGE 10]
United States v. Munsey Trust Co., 332 US
234, 67 S. Ct. 1559, 91 L. Ed. 2022 (1947)." Blake
Construction Co., Inc. v. United States, 585 F2d 998,
1005 (Ct. Cl. 1978).
NIP's CONTENTION THAT THE ALJ ERRED AS A MATTER OF LAW BY
FAILING TO GRANT NIP SUMMARY JUDGMENT BASED ON DOL's ADMISSION
THAT NIP FILED IN A TIMELY MANNER
The gist of NIP's argument that the DOL admitted that NIP
filed in a timely manner can be summarized as follows: By stating
in its April 7, 1993 Notice of Determination that "an acceptable
IQPA Report was submitted to the Department on October 21, 1991,"
the Department was in effect admitting that the IQPA Report
submitted by NIP on November. 8, 1990 was acceptable because the
IQPA reports were identical and therefore there was no basis for
levying any penalty on NIP. Furthermore, NIP asserted that the
DOL was foreclosed from correcting its April 7, 1993 Notice of
Determination by issuing a second Notice of Determination on June
17, 1993 after NIP filed its notice of appeal because, in NIP's
view, the DOL violated "its own regulations which guarantee [NIP]
an Administrative Hearing on the terms of the initial
determination," and further, that the second notice violated the
terms of the Federal District Court order granting NIP a
reasonable cause hearing, which directed the DOL to file a
Determination on NIP's Reasonable Cause Statement within 30 days
after the statement was submitted.
NIP's assertions cannot survive close scrutiny. First, the
documentary evidence shows that an acceptable IQPA report filed
in compliance with the DOL reporting requirements was not filed
until January 1992. The incorrect statement in the DOL's April
7, 1993 Notice of Determination does not change that fact, and
NIP cannot show any detrimental reliance on the DOL's mistaken
description of past events. Second, the mistaken reference
states that the October 21, 1991 filing of the IQPA's report was
acceptable, not the November 8, 1990 filing. Although the
October 21, 1991 filing of an amended annual report contained the
same IQPA report as the November 8, 1990 filing, it contained the
additional schedules which were conspicuously absent in the
November 8, 1990 filing. While the IQPA report was still
materially deficient, inasmuch as it was not revised to indicate
that the IQPA had examined and audited these schedules, this may
have misled the DOL into incorrectly stating that the IQPA report
was acceptable. However, even if one accepted NIP's premise that
the IQPA report which was filed on October 21, 1991, was an
acceptable accountant's report and that therefore the report
filed on November 8, 1990, was acceptable, inasmuch as it was the
[PAGE 11]
same report, that still does not change the fact that the
November 8, 1990 filing was still materially deficient in that it
failed to include a Schedule of Assets Held for Investment and a
Schedule of Reportable Transactions. These were filed on April
12, 1991 in response to the DOL's Notice of Intent to File a
Penalty. Therefore, even if the IQPA's report were deemed to be
acceptable, NIP did not file a satisfactory annual report within
45 days of the DOL's October 26, 1990 notice of rejection, and
DOL could, under its regulations, levy a penalty for failure or
refusal to file an annual report[9] .
NIP's final argument is that, once having stated that an
acceptable IQPA Report was filed on October 21, 1991 in its April
7, 1993 Notice of Determination, the DOL was foreclosed from
changing the factual determination after NIP appealed the DOL's
Determination to the ALJ. Analogizing to appeals of District
Court decisions to Courts of Appeal, where 'the District Court
loses jurisdiction upon the filing of appeal, NIP argues that the
DOL is divested of its right to correct its Determination. I
will not discuss this argument in detail, because even if it were
valid, it would not change my determination, for the reasons
stated above. Suffice it to say that I believe that NIP has
chosen the wrong analogy. The ALJ is not an appellate court, but
rather functions in many ways as a court of original
jurisdiction, hearing evidence.
If anything, the appropriate analogy would be to view the
DOL's Determination as similar to a complaint, which could be
enforced only if the ALJ, after hearing the evidence presented,
agrees with the DOL's determination. In such a situation, a
complaint which is factually inaccurate may be amended.
NIP'S ASSERTION THAT THE ALJ ERRED IN GRANTING SUMMARY
JUDGMENT TO THE DOL BECAUSE THERE EXIST GENUINE ISSUES OF
MATERIAL FACT REGARDING NIP'S COMPLIANCE.
The gist of NIP's argument is that "it had provided all
required data to the DOL prior to receiving either the March 15,
1991 DOL Notice of Intent to Assess a Penalty or the September
10, 1991 DOL Notice of Penalty Assessment[10] ." NIP faults the
ALJ, stating that he "totally disregards the critical factual
issue upon which this case hinges: whether Northwestern, contrary
to the DOL's allegations, complied with ERISA reporting
requirements before the time alleged[11] ."
This allegation illustrates NIP's misunderstanding of
ERISA's reporting requirements. Under DOL's regulations, for a
[PAGE 12]
plan administrator to avoid the levy of a penalty, the
administratormust file an annual report with no material
deficiencies within 45 days of the date of the notice of
rejection. 29 CFR 2560.502c2(b)(3). This was clearly stated to
NIP in the DOL's October 26, 1990 Notice of Rejection. However,
the record in this case abundantly shows that neither an
acceptable accountant's report nor the requisite separate
schedules of assets held for investment and five percent
reportable transactions were included with the annual report
filed on November 8, 1990. Therefore, there is no genuine issue
of material fact as to whether NIP complied with ERISA's
reporting requirements within the requisite time period.
Having rejected all of NIP's legal arguments as to whether
it has complied with the law or has at least raised factual
issues as to whether it has complied with the law, I turn now to
NIP's last argument.
NIP'S ASSERTION THAT THERE EXISTS AN ISSUE OF FACT AS TO
WHETHER NIP HAS PRESENTED REASONABLE CAUSE TO JUSTIFY FULL
ABATEMENT OF THE DOL'S PENALTY.
NIP' s argument, in brief, is that DOL's reporting
requirements are technical and it relied on its outside
accountants and third party administrators to comply with the
requirements, and that this reliance justified a full abatement
of the penalty, rather than a 75 percent abatement.
To this argument, I can only repeat what the ALJ concluded:
"Considering the extraordinary length of time that
transpired before NIP filed a complete Form 5500 and the
severity of the omissions... the court can find no basis to
set aside the DOL assessment of penalty or its subsequent
modification."
To the extent that NIP believes that it was poorly served by
its professional service providers, its remedy lies elsewhere.
It certainly cannot complain that it was not put on notice in
plain English by the IRS and DOL as to the deficiencies which
were required to be remedied and the consequences if they were
not remedied within the specified time frames. However, it chose
to dance a dance of disregard and delay, extending from its
receipt of the first IRS deficiency letter dated February 14,
1990, through January 17, 1992, when it finally filed a complete
Form 5500 with no material deficiencies. Having danced the
dance, it must now pay the piper. The judgment of the ALJ is
affirmed in all respects. I hereby order that NIP pay DOL
$21,625 within thirty (30) days from the date of service of this
decision, with credit given to NIP for ,000 previously paid to
the DOL. Amounts not paid by that time shall be subject to
penalties and interest provided for by ERISA and its implementing
regulations.
MORTON KLEVAN
Senior Policy Advisor
[ENDNOTES]
[1] This letter was mistakenly referred to as being sent on
March 20, 1993 in the ALJ opinion.
[2] While NIP's letter was dated June 6, 1990, the enclosed Form
5500 was dated June 7, 1993. In the ALJ opinion, this letter was
described as sent on June 20, 1993.
[3] The Administrative Law Judge's opinion refers to this letter
as filed on November 23, 1993. This is a mistaken reference to
the date it was received by the Department, which was November
23, 1990.
[4] The ALJ's opinion mistakenly refers to this filing as
having taken place on November 23, 1993.
[5] This was the report which the NIP filed by letter dated
January 17, 1992.
[6] Appellant's brief, pp.16-17, quoting the standard for accord
and satisfaction set forth in McDonald v. United
States, 13 Cl. Ct. 255 (1987).
[7]
NIP's letter, addressed to "Dear Sir or Madam," states in its
entirety, the following:
"Pursuant to the United States Department of Labor's Grace
Period Program, enclosed is Northwestern Institute of
Psychiatry's Form 5500 for Northwestern Institute of
Psychiatry's Pension Plan for fiscal plan year April 1, 1988
through March 31, 1989, together with the required
attachments and the One Thousand Dollar (,000.000) check
made payable to the U.S. Department of Labor. I note that
Northwestern's Employer Identification No. is 23-1673341;
and the Plan No. is 001."
.
[8] Appellee's brief, pp.6-7. The Appellant's brief does not
contradict this statement.
[9] See 29 CFR 2560.502c-2(b)(3)
[10] Appellant's briefs, p.25
[11] See F.n. 10, supra.