Summary Plan Descriptions Under ERISA May Do More Than Summarize Your Benefit Plan

When individuals are enrolled in a group benefit plans, they are typically provided with a “Summary Plan Description” (“SPD”) which is a document that communicates plan rights and obligations to participants and beneficiaries under their ERISA plan. While the actual Benefit Plan Trust Agreement, which contains the formal provisions that make up a benefit plan, is usually made available to participants, the separate SPD is traditionally provided in order to summarize the material provisions of a Benefit Plan documents in a way that can be understood by an average benefit plan participant, as the actual Benefit Plan document can be extremely lengthy and complex. However, sometimes the provisions in the SPD can differ from those in the Benefit Plan or can contain provisions that are not found in the Benefit Plan. The United States Supreme Court determined that if the terms of a SPD differ from those contained within the ERISA plan documents, the provisions in the ERISA plan documents control (See CIGNA Corp. v. Amara, 563 U.S. 421 (2011)). A recent decision by the Ninth Circuit Court of Appeals, however, determined that a SPD may in fact constitute a formal Plan document, and its provisions may be enforced, when it adds provisions required by ERISA but does not conflict with the Benefit Plan.

In Mull v. Motion Picture Industry Health Plan, No. 15-56246 (9th Cir. Aug. 1, 2017), the plaintiff was injured in a car accident and her health insurance plan (the “Plan”) extended $147,948.38 in benefits for the treatment of her injuries. The plaintiff subsequently recovered $100,000.00 from the third party that was responsible for the car accident, and the Plan sought reimbursement from future payments pursuant to the overpayment provision contained in the SPD. The plaintiff sued the Plan seeking (1) a declaration prohibiting the health insurance plan from offsetting future benefits pursuant to the reimbursement provision, (2) reimbursement for offsets that were taken, and (3) recovery of future benefits. The district court granted summary judgment in favor of plaintiff, holding that because the reimbursement provisions the Plan sought to enforce were found only in the SPD and not within the Plan, the provisions were not legally enforceable under ERISA.

The Ninth Circuit Court of Appeals reversed the decision holding that because the Plan did not provide a basis on which payments were to be made to and from the Plan, but the SPD provided the basis for payments in great detail, the SPD constituted a Plan document. Therefore the ERISA Plan included the SPD. The Court determined that its decision did not conflict with the Supreme Court’s decision in Amara, as that decision only addressed the circumstance where both a governing plan document and a SPD existed and a plan administrator seeks to enforce a provision in the SPD over the terms found in a governing plan document. Here, the Court determined the SPD is a part of the plan itself as it provided for the basis on which payments were to be made and it did not conflict with the Plan.

This decision is important because it clarifies that a SPD may constitute a substantive plan document rather than merely a summary of the provisions contained in the Benefit Plan. The court in Mull found significant importance in the fact that the SPD at issue was clearly designed to constitute part of the Plan, and the court also found it important that the SPD contained a provision required by ERISA that was not contained within the other documents in the Plan. Therefore, the extent to which a SPD can be considered part of a plan’s controlling documents remains somewhat ambiguous. Nevertheless, the Mull decision clarifies that the SPD can be a substantive plan document, at least when it is clearly intended to be a substantive plan document and it adds a provision to a plan that is required by ERISA that is not contained within the other plan documents.

If your claim for life, retirement, health, short-term disability or long-term disability benefits has been denied, you can call (949) 387-9595 for a free consultation with the attorneys of the McKennon Law Group PC, several of whom previously represented insurance companies and are exceptionally experienced in handling both ERISA insurance claims and non-ERISA state law insurance bad faith claims.

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