Welfare Benefit Plan ERISA News & Views
August 2010

An SPD without a Plan Document is Incomplete
Many insurance companies provide a complimentary ERISA "wrapper" template for employers to fill in and attach to their certificates of insurance. A few carriers even include the required ERISA disclosure language in the content of their certificates to transform them into Summary Plan Descriptions, or SPDs. And several popular ERISA document vendors produce SPDs without preparing a Plan Document for the employer. However, having an SPD alone, or one that takes on the dual role of Plan Document and SPD, or even an incomplete or inconsistent Plan Document, may leave the employer/Plan Administrator exposed.
ERISA requires employers/Plan Administrators to adopt a written Plan Document, which is the source of authority and documentation of administrative practices. It controls many important legal matters such as amendment procedures and should contain a grant of discretionary authority to fiduciaries to make benefit determinations. The Plan Administrator is also required to deliver a plain language summary of the plan, called a Summary Plan Description or "SPD," to its Participants.  
When a Plan Participant sues a plan fiduciary over a benefit claim decision, the standard of review used by the court can make or break the case for the Administrator/fiduciary/employer. The standard of review determines the scrutiny that the court will apply when reviewing the fiduciary's decisions. The highest degree of scrutiny - de novo review - enables the court to review even the smallest errors. Under the standard of review more favorable to the fiduciary - the "abuse of discretion" or "arbitrary and capricious" standard - a court may review only the largest and egregious errors.
In this and other recent cases, the SPD granted the Plan Administrator the discretion to interpret the plan and determine eligibility for benefits - language that did not appear in the plan itself. Upon appeal, the court held that the Plan Administrator was not entitled to the more favorable "abuse of discretion" standard of review for ERISA Plans. The appeals court reversed the decision of the district court and sent the case back to a lower court to review the Plan Administrator's decision to deny a claim for long-term disability benefits under the "de novo" standard, which is more favorable to the employee/plaintiff.
These cases underscore the need for a carefully prepared Plan Document that is consistent with the SPD on this issue and other important issues, such as subrogation and reimbursement rights.

Roy Harmon III, Health Plan Law, "Plan Administrators Cannot Invoke 'SPD Prevails' Rule to Cure Plan Language Deficiencies"
Ringwald v. Prudential Ins. Co. of Am. (8th Cir.) (06/21/10)
Jobe v. Med. Life Insurance Co., 598 F.3d 478 (8th Cir. 2010)
Mercer, "US Supreme Court to consider remedy for deficient SPD"

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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.


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