:: 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 . . .”

The Court’s careful distinctions between plan sponsor and plan administrator responsibilities, like the distinction between plan documents and summary plan descriptions, and for that matter, like its trust law analogies, just cause confusion in the practical world where benefits are conferred, denied or litigated.

For example, claims administrators typically provide the documentation which employers accept more or less as presented (without regard to plan sponsor/administrator roles) and employers are typically designated as plan administrators and plan sponsors in any event.   Likewise, summary plan descriptions are frequently presented to plan participants as also constituted “the” plan document.

Against this backdrop we find that wherever insurance companies are involved, whether in ASO or insured plans, one is certain to find all sorts of additional documents that alternatively cross-reference one another and omit important information (all the while placing responsibility on the employer).

So it is not surprising to find that the Court’s analysis, so far removed from the workaday world, does not find even application by the district courts who must bridge the gap.

Zalduondo v. Aetna Life Ins. Co., quoted at the outset, serves as a reminder that we will have a long road ahead as the courts attempt to develop the Court’s minimalist analysis of plan documentation into useful precedent.

As the district court noted in Eugene S., 663 F.3d at 1131, Amara held either “(1) the terms of the SPD are not enforceable when they conflict with governing plan documents, or (2) the SPD cannot create terms that are not also authorized by, or reflected in, governing plan documents”.

Of course there are many reasons that the determination of what constitutes “the” plan document is important.  For one, the plan document confers discretionary authority on the plan administrator – or not.

For example, the court in Durham v. Prudential Ins. Co. of Am., 890 F. Supp. 2d 390 (S.D.N.Y. 2012) held that “the SPD cannot confer discretion” and “[a]ccordingly, the appropriate standard of review is de novo.”  Obviously, many other important issues such as plan eligibility and reimbursement rights are communicated through the plan document as well.

The court in Zalduondo ultimately concluded that a set of documents could constitute “the” plan document and confer discretion on the plan administrator.  This conclusion averted the objection that the SPD alone cannot confer discretion since “the SPD is incorporated within the Plan.”

Note:  An earlier opinion of the D.C. Circuit has been influential.  In Pettaway v. Teachers Ins. & Annuity Ass’n of Am., 644 F.3d 427 (D.C. Cir. 2011), the court stated that:

The key dispute between the parties in this appeal is to which of the three Academy Plan documents—the Plan Document, the Summary Plan Description, or the Policy Document—the court may look to determine whether “the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Pettaway argues that only the Policy Document is legally relevant. TIAA and the Academy argue that all three documents must be considered together. Although the question is one of first impression in this circuit, we agree with the district court that in this case all three documents should be examined to determine the appropriate standard of review.

The rationale for the collective approach was as follows:

Our decision to look  at all of the Academy Plan documents is supported both by the text of ERISA and by the weight of authority from the other circuits that have considered this question. First, ERISA’s statutory text suggests that multiple plan documents can be legally relevant. ERISA requires that a “summary plan description of any employee benefit plan shall be furnished to participants and beneficiaries” and specifies that it “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.” 29 U.S.C. § 1022(a). The statute further requires that the summary plan description contain, inter alia, “the plan’s requirements respecting eligibility for participation and benefits” and the “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits.” 29 U.S.C. § 1022(b). Far from being an irrelevant piece of human resources material, the Summary Plan Description is the ERISA-mandated, plain- language document upon which plan participants may rely to understand their benefits.  Furthermore, ERISA sections on fiduciary responsibilities imply that there will be multiple legally important plan documents.

The court provided this helpful collection of cases on this topic:

Other circuit courts that have considered this question have also generally concluded   that multiple plan documents are legally relevant. For example, in Young v. Verizon’s Bell Atl. Cash Balance Plan, the Seventh Circuit held that because both a “summary plan description” and a “summary of any material modification” are ERISA-required writings, each should be given primary effect and strictly enforced. 615 F.3d 808, 817-18 (7th Cir. 2010). Relying on the text of 29 U.S.C. § 1024(a)(6), the Eleventh Circuit recognized that many documents control the operation of a benefits plan under ERISA, including the summary plan description, the bargaining agreement, the trust agreement, the contract, and other instruments. Heffner v. Blue Cross and Blue Shield of Ala., Inc., 443 F.3d 1330, 1342-43 (11th Cir. 2006). The Sixth Circuit recognized the importance of the summary plan description, concluding that “statements in a summary plan are binding and if the statements conflict with those in the plan itself, the summary shall govern.” Yolton v. El Paso Tennessee Pipeline Co., 435 F.3d 571, 582 n.10 (6th Cir. 2006) (citation omitted). Similarly, many circuits have recognized the legal significance of summary plan descriptions. See, e.g., Bergt v. Retirement Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139, 1143 (9th Cir. 2002)  (“[T]he SPD is a plan document and should be considered when interpreting an ERISA plan.”); Hughes v. 3M Retiree Medical Plan, 281 F.3d 786,790 (8th Cir. 2002) (same); Fallo v. Piccadilly Cafeterias, Inc., 141 F.3d 580, 583-84 (5th Cir. 1998) (same); Chiles v. Ceridian Corp., 95 F.3d 1505, 1511 (10th Cir. 1996) (same).