Most Summary Plan Descriptions (“SPDs”) contain disclaimer language stating that in case of conflict between the SPD and the Plan documents, the Plan documents will always govern. In fact, sometimes SPDs are given less attention than we benefits lawyers recommend, usually due to cost or other factors and because people often believe that the disclaimer language will protect them. However, whatever the reason, it appears that the courts are not always willing to enforce provisions of a Plan document that are not disclosed in the SPD, despite the disclaimer language.
One such case occurred less than a year ago–Burgett v. MEBA Medical and Benefits Plan. The case involved a health plan which refused to process the medical expenses of a dependent of a participant unless the participant signed a subrogation agreement. The court looked at two “plan documents” to determine what was the proper result under the Plan–one was called the Plan Rules and Regulations (which the court referred to as the Plan document ) and the other was the SPD. Both contained subrogation language. However, the requirement that the participant sign a subrogation agreement before becoming entitled to reimbursement of medical expenses was contained only in the Plan Rules and Regulations and not in the SPD. The SPD also contained disclaimer language stating that the Plan Rules and Regulations controlled.
Despite the presence of subrogation language in both documents and despite the disclaimer language in the SPD, the court held:
The governing statute and regulations require the SPD to inform the participants and beneficiaries of the circumstances that might result in the denial of or the loss of benefits. The requirement to execute a subrogation agreement was not a condition listed in the SPD, although it was arguably included in the Plan Rules and Regulations. When the formal plan documents conflict with an SPD, the SPD controls. . . Because the SPD is the controlling plan document and contains no requirement that the participants or beneficiaries execute a subrogation agreement as a condition to receiving benefits, the administrator was legally incorrect when it imposed that requirement.
Another more recent case of Solien v. Raytheon Long Term Disability Plan is even more worrisome. In that case, the court refused to uphold a one-year limitations period for challenging benefit claims in court where the limitations period was stated in the SPD, but was not stated in a place in the SPD that the court felt would put the participant on notice about the limitations period. (In other words, not only do you have to make sure the appropriate language is in the SPD, but it is also important as to where the information is placed in the SPD–according to the Arizona district court in the Solien case.)