:: Plan Administrator Definition Ambiguity Defeats Insurer’s Motion To Dismiss

Defendants argue that controlling authority in this circuit rejects the concept of a “de facto” plan administrator, or one that is not expressly named in the health plan documents. However, a number of courts, including courts in this jurisdiction, have treated insurance companies as plan administrators if they “control the distribution of funds and decide[] whether or not to grant benefits under an employee benefit plan.”

Mbody Minimally Invasive Surgery v. Empire Healthchoice HMO, Inc., 2015 U.S. Dist. LEXIS 22592 (D.N.Y. 2015) (February 25, 2015) (citations omitted)

Who is the plan administrator?   The statutory definition has not always been satisfactory to the courts.  In this post I will take the recent provider reimbursement case as an opportunity to provide some commentary on “plan administrator” status.

In the case at bar, the providers were seeking reimbursement from insurance providers, presumably under assignment of benefits from their patient-plan participants.

Of course, claims under ERISA have to fit one of the civil remedies provisions to go forward.  In this case, the provision at issue was §502(a)(1)(B).

Were the defendants plan administrators?

That’s the context for the plan administrator inquiry –

The issue here is whether defendants are “plan administrators.”

ERISA Section 502 empowers participants and beneficiaries to bring a civil action to recover benefits due under the terms of a benefits plan. See 29 U.S.C.A. § 1132(a)(1)(B). However, the Second Circuit has determined that such claims may only be brought against the plan, the plan administrator, or plan trustee. See Crocco v. Xerox Corp., 137 F.3d 105, 107 (2d Cir. 1998).

Confusing plan documents

As is often the case with insured arrangements, the documents were a mess.  I have never really understood why that is one of the eternal verities but it just seems to be.

So in this case the documents were not clear on the designation – at least not to the court’s satisfaction.

The court was not then, and is not now, satisfied that all the health plan documents name entities other than the defendants as health plan administrators.

Even for those that appear to do so, it is impossible to discern from the materials provided which health plan documents correspond to which defendants, purportedly immunizing them from § 502(a)(1)(B) claims. And, as discussed, some of the health plan documents do not, in fact, name entities other than defendants as the plan administrator.

What happens when the documents are unclear?

The defendants, unsuccessful in their motion, argued that the district court was using the notion of a “de facto” plan administrator.  In some circuits, this is a viable approach but not in the Second Circuit.

To this argument, the court demurred, stating:

Defendants argue that controlling authority in this circuit rejects the concept of a “de facto” plan administrator, or one that is not expressly named in the health plan documents. See Rep. Mem. L. Further Supp. Mot. Part. Recons. at 2 (citing Crocco v. Xerox Corp., 137 F.3d 105, 107 and Lee v. Burhkart, 991 F.2d 1004, 1010 n.5 (2d Cir. 1993)). However, a number of courts, including courts in this jurisdiction, have treated insurance companies as plan administrators if they “controlf] the distribution of funds and decide[] whether or not to [*6] grant benefits under an employee benefit plan.” See, e.g., Sheehan v. Metro. Life Ins. Co., No. 01-CV-9182 (CSH), 2002 WL 1424592, at *2 (S.D.N.Y. June 28, 2002).

In any event, defendants’ argument misconstrues this court’s decision. This court did not reach the question of whether plaintiffs may maintain a § 502(a)(1)(B) claim against de facto plan administrators.

Rather, the court held that plaintiffs had plausibly alleged that defendants are plan administrators themselves, noting “plaintiffs … do allege [they] are the plan administrators in other sections of the complaint.” See Opinion of Aug. 15, 2014, at 7-8 (citing Compl. 1 56).

In other words, the court stated that the defendants had misconstrued its holding.  The defendants were free to adduce evidence that they were not the plan administrators at a later stage in the proceeding.

Note:   The question of plan administrator status is important in other contexts as well, such as in cases of plan information requests and the application of statutory penalties.  Please see my discussion of this topic in a prior post here.

Circuit Conflict – The conflict noted in the opinion is set forth in Crocco v. Xerox Corp., 137 F.3d 105 (2d Cir. 1998) as follows:

We believe, however, that our reasoning in Lee v. Burkhart, 991 F.2d 1004 (2d Cir. 1993), precludes a finding that an employer is a de facto co-administrator jointly liable with the named administrator in a suit to recover benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). In Lee, we rejected a claim that an insurance company — under contract to provide assistance in the management of an employer’s self-funded employee benefits plan -was an unnamed plan administrator. See id. at 1010.

In doing so, we expressly stated our disagreement with decisions of the First and Eleventh Circuits holding employers responsible as de facto administrators under ERISA §§ 502(a)(1)(A) and 502(c), 29 U.S.C. §§ 1132(a)(1)(A), 1132(c). See id. at 1010 n.5 (citing Rosen v. TRW, Inc., 979 F.2d 191, 193-94 (11th Cir. 1992); Law, 956 F.2d at 372-74).

And we cited with approval the Tenth Circuit’s decision in McKinsey v. Sentry Insurance, 986 F.2d 401 (10th Cir. 1993), which criticized the view that an employer could be a de facto administrator, and held that HN2″[29 U.S.C. § ] 1002(16)(A) provides that if a plan specifically designates a plan administrator, [**7] then that individual or entity is the plan administrator for purposes of ERISA,” id. at 404. n3 In short, then, we think that the reasoning -if not necessarily the holding — of Lee precludes employer liability, as a de facto co-administrator, in a suit brought under § 502(a)(1)(B), where the employer has designated a plan administrator in accordance with 29 U.S.C. § 1002(16)(A).

 Statute – The statute provides:

(16) (A) The term “administrator” means–

(i) the person specifically so designated by the terms of the instrument under which the plan is operated;

(ii) if an administrator is not so designated, the plan sponsor; or

(iii) in the case of a plan for which an administrator is not designated and a plan sponsor cannot be identified, such other person as the Secretary may by regulation prescribe.

29 USCS § 1002

:: Incorporation of SPD In Plan Document Preserves Deferential Review

 . . . [I]n light of Cigna Corp. v. Amara, 131 S.Ct. 1866, 179 L. Ed. 2d 843 (2011) the Court doubted whether it could rely on the SPD alone in the absence of the actual plan document. Zalduondo, 2013 U.S. Dist. LEXIS 59234, 2013 WL 1769718, at *14 (observing that the Court in Amara rejected enforcement of the terms of SPDs as part of the the terms of the Plan itself). Consequently, it deferred judgment on whether the arbitrary and capricious standard applied until Aetna could demonstrate that the Plan documents did not conflict with the SPD. Id.

Having reviewed the Plan documents, the Court and both parties now agree that the SPD is incorporated within the Plan. The Plan states “[t]he benefits offered under the Plan may be described in and subject to . . . summary plan descriptions . . . which are . . . incorporated in the Plan by reference.” Thus, the SPD’s grant of discretion to Aetna will be considered part of the Plan for the purposes of our analysis and we will only review Aetna’s denial of coverage under an arbitrary and capricious standard. See Pettaway v. Teachers Ins. & Annuity Ass’n of Am., 644 F.3d 427, 433-34, 396 U.S. App. D.C. 40 (D.C. Cir. 2011) (looking, post-Amara, to both the SPD and the Plan document to determine the level of deference owed to the claims adjudicator).

Zalduondo v. Aetna Life Ins. Co., 2013 U.S. Dist. LEXIS 96326 (D.D.C. July 10, 2013)

The Supreme Court’s scrutiny of the plan documents in Cigna Corp. v. Amara, 131 S.Ct. 1866, 179 L. Ed. 2d 843 (2011) sparked lively debate over the relationship of  “the” plan document and summary plan descriptions or other documents purportedly constituting plan documentation.   The Court observed that “the summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan . . .”

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:: District Court Permits Supplementation Of Record But With Instruction On Law

ERISA provides federal courts with jurisdiction to review benefits determinations made by fiduciaries or plan administrators. 29 U.S.C. § 1132(a)(1)(B); see also Lopez ex rel. Gutierrez v. Premium Auto Acceptance Corp., 389 F.3d 504, 509 (5th Cir. 2004). A district court’s function when reviewing ERISA claims is like an appellate court’s.

“[The court] does not take evidence, but, rather, evaluates the reasonableness of an administrative determination in light of the record compiled before the plan fiduciary.” Leahy v. Raytheon Co., 315 F.3d 11, 18 (1st Cir.2002). Courts cannot consider additional evidence “resolve the merits of the coverage determination—i.e. whether coverage should have been afforded under the plan-unless the evidence is in the administrative record, relates to how the administrator has interpreted the plan in the past, or would assist the court in understanding medical terms and procedures.” Crosby v. La. Health Serv. & Indem. Co., — F.3d —, No. 10-30043, 2010 U.S. App. LEXIS 26323, *8, 2010 WL 5356498 (5th Cir. Dec. 29, 2010).   A claimant is not permitted to explore, through discovery in an ERISA lawsuit, what information a plan administrator “should have considered” in making its benefits determination, as opposed to analyzing the information that the plan administrator “did consider” in making its decision. Griffin, 2005 U.S. Dist. LEXIS 18720, 2005 WL 4891214, at *2.

Bullard v. Life Ins. Co. of N. Am., 2011 U.S. Dist. LEXIS 47 (S.D. Tex. Jan. 3, 2011)

In this claim for accidental death benefits, a factual dispute arose over policy exclusions given the circumstances of death. The deceased, Darnell Berryman, died six days after receiving 17 stitches for a knife wound to his face. He was on prescribed medication after the stitches but h also had a history of sleep anea. The death certificate and autopsy report listed the cause of death as “Acute Toxicity due to the Combined Effects of Hydrocodone, Alprazom, Carisprodol, and Promethazine.”

As explained in more detail below, the carrier denied the parents’ claim for death benefits. The issue before the court, however, was not simply whether that denial should be overturned.

In fact, the insurer and the claimants agreed that further proceedings were appropriate before judicial review — they just couldn’t agree on the extent of those proceedings. Continue reading

:: ERISA Claim Denial Sustained In Accidental Death Case Despite Lack Of Causal Proof

That it may be impossible to prove that Mr. Nally was indeed hypoglycemic at the moment of his accident does not mean that LINA’s decision does not survive moderately heightened arbitrary and capricious review. It was not unreasonable for LINA to conclude on the record before it that Mr. Nally’s accident was a result of his hypoglycemia and thus not covered by this policy. The district court was correct to grant of summary judgment in favor of LINA.

Nally v. Life Ins. Co. of N. Am., 2008 U.S. App. LEXIS 23250 (3d Cir. 2008) (non precedential)

Nally is another in the line of cases wherein an apparent accident is disputed as an excluded sickness under the terms of an accidental death policy.  As is often the case, the deferential standard of review played an important role in this decision for the insurance carrier.

Mr. Nally died in a single car accident. 

Ms. Nally’s late husband, Dennis Nally, was an insulin-dependent diabetic. One morning on his way to work, he was involved in a high-speed, single-vehicle automobile accident. Witnesses described Mr. Nally’s driving before the crash as erratic. The police found no evidence of mechanical failure, poor driving conditions, or drug use by Mr. Nally.

What caused the accident?  The evidence was sparse.

Mr. Nally suffered severe traumatic injuries in the accident. It took response personnel approximately forty-five minutes to extricate him from his vehicle. His glucose was measured around the time he was extracted and found to be 37 mg/dl. Emergency medical technicians transported Mr. Nally to a hospital, where he died several days later.

The glucose level became the focal point. 

I gather that at some point Ms. Nally told the police that Mr. Nally had hypoglycemia.  Other than that, the cause of the accident was an enigma.

The carrier, in considering Ms. Nally’s claim for benefits, engaged an expert.  The expert, however, “stated that because of the time lapse between the accident and Mr. Nally’s first glucose test she could not determine whether he was hypoglycemic at the time of his accident”.  

Thus, the court observed  “it may be impossible to prove that Mr. Nally was indeed hypoglycemic at the moment of his accident . . . ”

Standard Of Review Decisive

At this point, there were two ways the court could go.  One approach would be to place the burden on the carrier – the other, to place the burden on the participant. 

The participant argued that under a “reasonable expectations” view, the carrier should bear the burden of proving that the sickness exclusion applied.

Ms. Nally argues at length for the blanket proposition that courts, rather than insurance companies, are entrusted with the responsibility of interpreting insurance contracts. . . . Ms. Nally’s argument rests in large part upon her assertion that Pennsylvania’s reasonable expectations doctrine is applicable. [Blue Br. at 34-40]

This argument ran afoul of ERISA.  The court opined:

However, federal common law–not state law–governs the interpretation of a benefit plan in an ERISA suit. Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202, 1210 (2d Cir. 2002); Hooven v. Exxon Mobil Corp., 465 F.3d 566, 572 (3d Cir. 2006) (“Generally, breach of contract principles, applied as a matter of federal law, govern claims for benefits due under an ERISA plan.” (quotation marks omitted)).

 The standard of review turned the issue in the carrier’s favor:

After correctly determining the applicable standard of review, the district court correctly applied it to review LINA’s rejection of Ms. Nally’s claim. As the district court found, there was evidence consistent with the proposition that Mr. Nally was hypoglycemic at the time of his accident and that his hypoglycemia caused the accident. That it may be impossible to prove that Mr. Nally was indeed hypoglycemic at the moment of his accident does not mean that LINA’s decision does not survive moderately heightened arbitrary and capricious review. It was not unreasonable for LINA to conclude on the record before it that Mr. Nally’s accident was a result of his hypoglycemia and thus not covered by this policy. The district court was correct to grant of summary judgment in favor of LINA.

 Note:  On the court’s view, evidence need only be “consistent” with the carrier decision to warrant sustaining the benefit denial.  The evidence on this point:

while Terlecki stated that because of the time lapse between the accident and Mr. Nally’s first glucose test she could not determine whether he was hypoglycemic at the time of his accident, she also noted that a blood glucose level of 37 mg/dl was inconsistent with “safely operating a motor vehicle” and would produce “cognitive impairment.”

Summary Plan Conflict –  The court recounts the prevailing law in the Third Circuit when the SPD has language absent from the plan document.  This issue did not really bear on the outcome, but it is interesting to review:

“[W]here a summary plan description conflicts with  the plan language, it is the summary plan description that will control.” Burstein v. Ret. Account Plan for Employees of Allegheny Health Educ. & Research Found., 334 F.3d 365, 378 (3d Cir. 2003). “If an SPD conflicts with a plan document, then a court should read the terms of the ‘contract’ to include the terms of a plan document, as superseded and modified by conflicting language in the SPD.” Id. at 381.

The district court determined that because both the policy and the SPD contained an unambiguous grant of discretion to some entity, the discrepancy between the two as to which entity had this discretion was not significant in this instance. [Slip op. at 12] The district court reasoned that the two documents could be read harmoniously as granting the Tyco Benefits Review Committee discretion (as noted by the SPD) which was permissibly delegated to LINA (as noted by the policy). [Id.]

We agree with the district court. In Tocker v. Phillip Morris Cos., the Second Circuit determined that a policy vested discretion in an administrator even though the SPD given to the plaintiff was completely silent on the issue. 470 F.3d 481, 488-89 (2006). Other circuits have reached the same conclusion.  [*6] See Fenton v. John Hancock Mut. Life Ins. Co., 400 F.3d 83, 90 (1st Cir. 2005); Martin v. Blue Cross & Blue Shield of Va., 115 F.3d 1201, 1205 (4th Cir. 1997); Cagle v. Bruner, 112 F.3d 1510, 1517 (11th Cir. 1997); Wald v. S.W. Bell Corp. Customcare Med. Plan, 83 F.3d 1002, 1006 (8th Cir. 1996); Atwood v. Newmont Gold Co., 45 F.3d 1317, 1321-22 (9th Cir. 1995), overruled on other grounds by Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 966-67 (9th Cir. 2006) (en banc). Given these holdings from other circuits, it would be anomalous for us allow the SPD’s statement that the Tyco Benefits Review Committee had discretion to interpret the policy to invalidate the policy’s grant of discretion to LINA.

Standard Of Review – The Court approved a “sliding scale” approach to evaluating the “structural conflict” – the carrier both funded and paid claims.  Nonetheless, the Court approved the district court’s conclusion that that no procedural factors warranted increasing its scrutiny of LINA’s decision to deny Ms. Nally’s claim, and was therefore correct to apply only a “moderately-heightened” standard of review.  It is difficult to see what such hybrid standards really mean, if anything, and whether they are even permissible after Glenn’s rejection of special evidentiary rules.

:: How A Traffic Accident Can Be A Sickness – The Denial Of Accidental Death Benefits Based Upon Plan Exclusions

ERISA’s provision governing summary plan descriptions states, in pertinent part: “[a] summary plan description of any employee benefit plan … shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” Burnstein, 334 F.3d at 378-79 (quoting 29 U.S.C. § 1022).

Without delving into the instant applicability or appropriateness of Pennsylvania’s “reasonable expectations doctrine” see infra, the Congressional intent behind ERISA’s SPD regulations does relate broadly to employees’ “expectations” in the sense that it is “the document to which the lay employee is likely to refer in obtaining information about the plan and in making decisions affected by the terms of the plan,” and thus the SPD should be a “transparent, accurate, and comprehensive” summation of the plan document. Id. Here, were plaintiff to refer to the SPD for the unlikely purpose of determining the standard of review a federal district court might utilize in a review of a denial of benefits under this Group Accident Policy, as previously explained, the SPD would not lead her astray. For all the foregoing reasons, we reject plaintiff’s arguments that de novo review applies, and apply arbitrary and capricious review.

Nally v. Life Insurance Corp. of North America, Slip Copy, 2007 WL 4390423 (E.D.Pa.) (December 14, 2007)

What is an accident? Most lay persons would not suspect how troubling this question has been for judges. The lay person would approach the issue from the perspective of common usage of the word and with a measure of common sense.

The judge, on the other hand, must put common sense and experience aside. He turns to contract law, and in the case of and ERISA plan, a complex calculus of inquiries into an insurer’s degree of self interest to determine the appropriate standard of review. Based on these guiding principles alone, that is, contract law as modified by ERISA, this inquiry will frequently lead to the conclusion that the insurer’s denial of claims should be upheld if there is any rational basis for doing so.

So it was in the case of Nally v. Life Insurance Corp. of North America where, at the conclusion of a lengthy opinion, the district court judge applied a “moderately heightened arbitrary and capricious review” to find that Dennis Nalley’s automobile flipped and crashed – not by accident as witnesses to the carnage undoubtedly presumed – but as a result of sickness.

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:: Fifth Circuit Rejects Claim For Death Benefits As Impermissible Attempt To Recovery Money Damages

The facts as detailed in Chief Judge Jones’s opinion scream out for a remedy beyond the simple return of premiums. Regrettably, under existing law it is not available. I am constrained to join the court’s opinion, which I find correctly applies controlling precedent. Judge Benavides, concurring opinion, Amschwand ex rel. Estate of Amschwand v. Spherion Corp., — F.3d —-, 2007 WL 3027072 (C.A.5 (Tex.)) (October 18, 2007)

Amschwand ex rel. Estate of Amschwand v. Spherion Corp. epitomizes the quandary created by the approach taken in ERISA jurisprudence by the federal judiciary. In this case, a widow of deceased plan participant brought suit against his employer for loss of life insurance benefits caused by employer’s breach of fiduciary duty. As noted by in the concurring opinion of Judge Benavides, the outcome of the case was unpalatable not only for the plaintiff, but perhaps for the court as well. Continue reading

:: ERISA Plan Prohibited From Conditioning Payment Of Claims On Execution Of Subrogation Agreement

Because the SPD is the primary document provided to the participants and the beneficiaries, in the event of conflicts between the plan and the SPD, the language of the SPD controls. Hansen v. Continental Ins. Co., 940 F.2d 971, 982 (5th Cir.1991); Hamilton v. Pilgrims Pride Employee Group Health Plan, 37 F.Supp.2d 817, 822 (E.D.Tex.1998). This is because the average beneficiary relies upon the SPD, not the plan. Accordingly, the SPD most nearly represents the intention of the parties. Fallo v. Piccadilly Cafeterias, Inc., 141 F.3d 580, 584 (5th Cir.1998). In the present case, the SPD contains no requirement that the beneficiaries or participants execute any subrogation agreement prior to having their claims for benefits processed. Burgett v. MEBA Medical and Benefits Plan, Slip Copy, 2007 WL 2815745 (E.D.Tex.) (September 25, 2007)

This district court opinion highlights two important aspects of health plan administration in the enforcement of reimbursement or subrogation provisions. A self-funded ERISA group health plan may pend payment of medical claims – and ultimately deny them – if participants do not execute documents required by the plan. An important caveat, however, is that the plan must contain a provision imposing this requirement.

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:: Conflict In Terms Between ERISA Plan Language and Summary Plan Descriptions – A Circuit By Circuit Synopsis

We certainly do not write on a clean slate. Indeed, there appears to be a five-way circuit split regarding whether an ERISA claimant needs to establish reliance and/or prejudice based on the conflicting terms of an SPD.

Washington v. Murphy Oil USA, Inc., — F.3d —-, 2007 WL 2326071 (C.A.5) (August 16, 2007)

When the terms of an ERISA plan and its summary plan description conflict, which terms apply? The answer to this question is another question – which circuit’s law governs the dispute?

As will be set forth below, the circuits differ in their conclusions.

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:: Review of Claim Denials (Unit 3): Limitation Of Argument To The Administrative Record

[P]laintiffs filed suit against the Plan on June 14, 2004 to recover benefits under § 502(a)(1)(B) of ERISA. See 29 U.S.C. § 1132(a)(1)(B). The district court certified the class on November 4, 2004, which was later enlarged to include four Spokane plaintiffs. The total amount of benefits sought by Plaintiffs is $6,701,626.32 . . . the Plan’s argument that the WFSP is not arranged by the Company for its employees generally is wholly unsupported and entirely inconsistent with its past practices. It would be unreasonable to deny benefits based on this ground. The Plan has articulated no other rationale for denying benefits, and we can conceive of none that is either apparent or meritorious. Thus, this is a case where a remand is unnecessary and we must award Plaintiffs the benefits to which they are clearly entitled. Flinders v. Workforce Stabilization Plan of Phillips Petroleum Co., — F.3d —-, 2007 WL 1894825 C.A.10 (Utah) (July 03, 2007)

This article follows two previous discussions on the theme of review of claim denials.

:: Review of Claim Denials (Unit 1): The Tenth Circuit Explains Its View On When “Remands” To Plan Administrators May Be Appealed

:: Review of Claim Denials (Unit 2): Disclosure Requirements On Administrative Appeal

As in the previous two units, a Tenth Circuit opinion provides the background for this article.

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:: Sixth Circuit Expands Rule Governing Plan Versus SPD Conflicts

The majority chooses to reach this issue as well, however, and in doing so expands Edwards, 851 F.2d at 136 (“statements in a summary plan are binding and if such statements conflict with those in the plan itself, the summary shall govern”) to cover perceived (or in this case, fabricated) conflicts between “Plans as interpreted and their corresponding summaries.” In this, the majority creates a new rule: this court need not review the actual plan to find a conflict and determine if the SPD controls; it need only consider whether the administrator interpreted (or appears to have interpreted, or could be said to have interpreted) the full plan in a way that is different from the way the court is presently interpreting the SPD. Judge Alice Bachelder, dissenting in Haus v. Bechtel Jacobs Co., LLC, — F.3d —-, 2007 WL 1772068 C.A.6 (Ky.) (June 21, 2007)

In this recent Sixth Circuit opinion, the Court expands its prior holding that summary plan description language prevails over conflicting plan language to include instances in which the SPD conflicts with a conflicting plan interpretation.

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:: Undisclosed Coverage Limitation Applied To Deny Death Benefit

In sum, this Court finds that the terms of the 1999 SPD were still in effect at the time of Plaintiff’s loss, regardless of the change in the insurance carrier. In addition, the representations made to Plaintiff, whether expressly through oral statements or impliedly through the deductions of premiums and the documents provided to him, did not alter the terms of Advance’s Plan. Finally, the fact that the 1999 SPD was not disclosed to Plaintiff does not entitle Plaintiff to a substantive remedy. This Court finds that there is no genuine issue of material fact and that Advance’s decision to deny Plaintiff’s claim was rational in light of the Plan’s provisions. McKenzie v. Advance Stores Co., Inc., — F.Supp.2d —-, 2007 WL 1514482 (S.D.Ohio) (May 22, 2997)

Given the lack of uniformity in documents associated with insured benefits, the principles set forth in this case have broad applicability as a practical matter. The facts involve the denial of a death benefit on the basis that only one plan enrollee could claim dependent life insurance for the death of an insured dependent.

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:: Erroneous Benefits Estimates: Informal Plan Communications Or Plan Documents?

Amanda Crosby filed an ERISA action against her father’s employer, Rohm and Haas, seeking to recover benefits allegedly owed to her as a beneficiary of her father’s life insurance policy with the company. In addition, she sought monetary penalties from the company because it allegedly violated ERISA’s disclosure requirements.

Crosby v. Rohm & Haas Co., — F.3d —-, 2007 WL 778146 C.A.6 (Ky.) (March 16, 2007) offers several useful pointers at the frequently litigated intersection of summary plan descriptions, benefit estimates and requests for plan information.

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:: Eighth Circuit Requires “Detrimental Reliance” For Employee To Recover Based Upon Inaccuracy in Summary Plan Description

The district court erred by adopting a “likely harm” prejudice standard. In order for an employee to recover from his employer for a faulty SPD, this court requires the employee to show he relied on its terms to his detriment. Greeley v. Fairview Health Services, — F.3d —-, 2007 WL 528218 (8th Cir. 2007) (February 22, 2007)

This case is one of three recent Eighth Circuit opinions involving summary plan descriptions (see case note below). As in the case of the other two opinions, this decision reverses a district court holding in favor of the plan participant.

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:: Eighth Circuit Finds Grant of Discretionary Authority In Policy Sufficient Notwithstanding Absence In Summary Plan Description

The district court relied primarily on the SPD. But “the policy and the Summary Plan Description jointly constitute the Plan documents.” . . . The triggering language may appear in a plan document other than the SPD. Rittenhouse v. UnitedHealth Group Long Term Disability Ins. Plan, — F.3d —-, 2007 WL 517739 (8th Cir.2007) (February 21, 2007)

In this case, the Eighth Circuit holds that a grant of discretionary authority in a long term disability policy is sufficient to trigger an abuse of discretion standard of review. Continue reading

:: Third Circuit Reverses “Vesting By Contract” Decision

It is one thing to acknowledge that contract principles apply in ERISA cases. Clearly, they do. Generally, a breach of contract principles, applied as a matter of federal law, govern” claims for benefits due under an ERISA plan . . . However, it is quite another to say that an employee’s severance benefit can be grounded in, and enforceable based on, a unilateral contract outside of ERISA’s remedial scheme. Although this approach is intuitively appealing, and seemingly appropriate in this complex area, we conclude that it is inconsistent with the basic framework of ERISA and, therefore, cannot be.

Hooven v. Exxon Mobil Corp., 2006 WL 2988116 C.A.3 (Pa.) (October 20, 2006)

In this dispute over severance benefits, the plaintiffs claimed entitlement to benefits under the terms of a summary plan description that Mobil distributed to employees following the announcement of the merger with Exxon. The district court granted summary judgment in favor of Exxon Mobil on the fiduciary duty, equitable estoppel and procedural and reporting claims, but determined that the Initial SPD established a unilateral contract “the terms of which became fixed when the employees performed.” Continue reading

:: Ambiguous Letter Does Not Constitute SPD

“It appears that Saks purposely deceived its nervous workforce by using this ambiguous term knowing it was likely to be misconstrued by employees, while at the same time ignoring its ERISA duty to furnish an SPD advising that the [change of control] Plan was available for all participants to examine. But there was no actionable misrepresentation and, indeed, no reasonable detrimental reliance by . . . employees who continued to work without confirming exactly what severance benefits were available under the COC Plan.” Antolik v. Saks, 2006 WL 2620626 (C.A.8 (Iowa)) (September 14, 2006)

In Antolik v. Saks, Inc., 2006 WL 2620626 (C.A.8 (Iowa)) (September 14, 2006), the employer, Saks, provided assurance to employees in an October 27, 2000 letter that, were a change in control to occur, employees would be entited to severance pay under a plan established by the employer. When Saks subsequently combined operations resulting in termination of a group of employees, controversy ensued over the “change in control” definition. Continue reading

:: SPD Saves Plan’s Subrogation Rights

“Defendants do not dispute that the plain language of the SPD provides for the right of reimbursement and subrogation. Rather, at issue is whether the SPD is properly part of the Plan so that its reimbursement provision is enforceable against defendants . . . ”

The Court in Administrative Committee of Wal-Mart Stores, Inc. v. Shank, 2006 WL 2546797 (E.D.Mo.) (August 31, 2006), resolved the foregoing issue in favor of the plan. The plan beneficiary attempted to defeat the plan’s subrogation and reimbursement rights by arguing that the Plan consisted only of a 1997 plan document. The plan document did not contain a subrogation provision.

Since the plan incorporated the summary plan description by reference, however, and since the SPD did contain appropriate subrogation wording, the court ruled in favor of the plan and imposed a constructive trust on the settlement proceeds.

Note: Cf. Hendricks v. Central Reserve Life Ins. Co., 39 F.3d 507, 511 (4th Cir.1994) (“if there [is] a conflict between the complexities of the plan’s language and the simple language of the [SPD], the latter [will] control if the participant relied on the SPD or was prejudiced by it.”); Martin v. Blue Cross & Blue Shield of Virginia, Inc., 115 F.3d 1201 (4th Cir. 1997) (plan document controls unless participant proves a conflict with the SPD and that the participant relied upon the SPD)