Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
In Kaufmann v. Prudential Insurance Company of America, a New Hampshire district court reasoned that a 180-day administrative appeal deadline stated in an ERISA plan’s summary plan description (SPD) -- but not the plan document -- was unenforceable and, thus, could not serve as a legitimate basis to challenge whether a disability plan participant timely exhausted administrative remedies.
In the wake of the United States Supreme Court’s decision in CIGNA Corp. v. Amara last year, courts consistently are recognizing that the written instrument constituting the plan must contain the basic terms and conditions of the plan. Applying this reasoning, the Kaufmann court concluded that an SPD could not add a mandatory appeal procedure when the plan itself was silent on the subject. By including the appeal procedures only in the SPD, the Kaufmann court observed that the plan administrator (who was also the plan sponsor) effectively sought to amend the plan without following the plan’s procedure for making amendments and without proper authority to do so.
The court also rejected the argument that the SPD’s appeal provisions constituted the terms of the plan document, especially where the SPD language expressly rejected that its provisions were a part of the plan. Further, the ERISA requirement that an SPD include claims administration/appeal procedures does not serve as a replacement, or excuse for, not including such language in the plan document. To the contrary, the court explained, requiring that claims procedures be included in the SPD is an additional requirement designed to communicate to plan participants appeal rights and procedures established in the plan.
Lessons Learned . . .
In certain circumstances (mainly in the welfare plan context), the SPD will be the written instrument constituting the “plan” and concerns about discrepancies between the plan and SPD may not arise. But even where the two are separate, there is a good argument that certain “procedural” terms (e.g., claims review procedures, contractual limitations periods, provisions describing the administrator’s discretionary authority to construe plan terms, etc.) lie outside Amara’s holding and should be enforceable even if they are housed only in the SPD.
Nevertheless, in light of decisions like Kaufmann, plan sponsors and administrators would be well-served to carefully review their plan documents to ensure that they contain both procedural terms and other terms that may have once appeared only in their SPDs. In other words, “say it once, and then say it again.”