:: Failure To Furnish SPD Can Lead To Loss Of Deferential Standard Of Review

Although Lumbermens has shown that the Summary Plan Description (“SPD”) unambiguously confers upon the Plan administrator discretionary authority to determine eligibility for benefits and to construe the terms of the plan, see Ingram v. Martin Marietta Long Term Disability Income Plan, 244 F.3d 1109, 1112 (9th Cir.2001), it has failed to show that it properly furnished Gertjejansen with the SPD as required by ERISA regulations.

Gertjejansen v. Kemper Ins. Companies, Inc., Slip Copy, 2008 WL 1787484 (C.A.9 (Cal.)) (unpublished)

Getting to an abuse of discretion standard of review is actually a two-step task.

First, the plan or SPD must actually have an appropriately drafted clause. Second, the document must actually get to the plan participant. While the outcome in this case was not affected by the standard of review, the case is nonetheless interesting for its focus on what often seems overlooked in benefit claims cases, i.e., were the plan documents actually distributed to the plan participants in the form present to the court as a part of the administrative record.

The ERISA Requirement

Under ERISA, “[t]he administrator shall furnish to each participant, and each beneficiary receiving benefits under the plan, a copy of the summary plan description, and all modifications and changes” within 120 days after the plan takes effect. 29 U.S.C. § 1024(b)(1)(B).

Now we are in the digital age, of course, so here the rule allows a variant on compliance, to wit:

A plan administrator satisfies those disclosure requirements by furnishing documents through electronic media as long as the administrator “takes appropriate and necessary measures reasonably calculated to ensure that the system for furnishing documents … [r]esults in actual receipt of transmitted information.” 29 C.F.R. § 2520.104b-1(c)(1)(i).

Placing Is Not Furnishing

Here the plan evidently missed a step. The Court observes:

Lumbermens has submitted nothing on the record to suggest that the mere placement of an updated SPD on its intranet site could ensure that Gertjejansen would actually receive the transmitted information. The district court correctly reviewed the denial of benefits de novo. When de novo review applies, “the court simply proceeds to evaluate whether the plan administrator correctly or incorrectly denied benefits.” Abatie, 458 F.3d at 963.

Thus, the failure to ensure that plan participants receive the digital information can have a bearing on the standard of review.

Note: In the Ninth Circuit, the SPD is a plan document and should be considered when interpreting an ERISA plan. Bergt v. Ret. Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139, 1143 (9th Cir.2002).

Disconnect? The Court just held that the plan failed to show that the participant actually received the updated SPD information. This cost the employer the favorable deferential standard of review. Nonetheless, it relied upon the SPD in reaching its decision on the merits:

An ERISA plan must be administered in the interest of the participants and beneficiaries in accordance with the documents and instruments governing the plan. 29 U.S.C. § 1104(a)(1)(D). Here, the SPD unambiguously states that participants must cooperate with the claim administrator’s request for a scheduled appointment for case management. It is clear from the record that Gertjejansen did not cooperate with repeated efforts to engage her in case management, making Lumbermens unable to reach a determination that Gertjejansen was disabled. It is therefore irrelevant whether Gertjejansen was in fact disabled because her breach of the Plan’s terms prevented such a determination from being made. See Jordan v. Northrup Grumman Corp. Welfare Benefit Plan, 370 F.3d 869, 880 (9th Cir.2004).

One would like to suppose that we are missing a fact here, or else the logic of the decision is impaired. It is difficult to see how the Court could hold that a participant could be reasonably be required to comply with requirements contained in an SPD was not furnished to her.