[firm] blog logo

Documentation of ERISA Authorized Representative Procedures

Under ERISA, a participant in an ERISA-covered plan has the right to designate an authorized representative to act on his or her behalf in connection with claims and appeals. The plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. Earlier this year, the DOL issued an information letter stating, in part, that: “The plan must include any procedures for designating authorized representatives in the plan’s claims procedures and in the plan’s summary plan description (“SPD”) or a separate document that accompanies the SPD.” Employers that sponsor ERISA plans should (i) verify that the claims procedures in each plan and SPD contain reasonable procedures for designating authorized representatives and (ii) amend the plan and SPD as needed. View the DOL information letter.

Plan Agent’s Misstatements, Plus a Deficient SPD, May Equal an ERISA Fiduciary Breach

A recent opinion issued by the U.S. Court of Appeals for the Second Circuit highlights the adverse consequences that may arise when an employer sponsor of a group health plan that is subject to ERISA fails to maintain a summary plan description of the plan (“SPD”) that is clearly written and that adequately and accurately describes the benefits available under the plan and the terms and conditions of coverage. Case Summary “In re: Emily DeRogatis” is a decision out of the U.S. Court of Appeals for the Second Circuit. Under the facts of this case, Mrs. DeRogatis, the widow of a deceased participant in a multiemployer group health plan, filed a breach of fiduciary duty claim under ERISA against the plan administrator, asserting that prior to her husband’s death, they were provided misinformation by two non-fiduciary, “ministerial” plan representatives (the “Representatives”) regarding the effect of Mr. DeRogatis’s retirement on their… Continue Reading

Fifth Circuit Opinion Clarifies Legal Claims Distinction under ERISA

In Manuel v. Turner Industries Group, L.L.C., the U.S Circuit Court of Appeals for the Fifth Circuit (whose jurisdiction includes Texas) considered various claims under ERISA that were brought by Michael Manuel, a former employee of Turner Industries (“Turner”). His claims were brought against Turner and Prudential, the insurer and claims fiduciary under Turner’s long-term disability benefits plan, and related to a denial of benefits to Manuel under that plan. One of his claims was for breach of fiduciary duty asserted against Turner under Section 502(a)(3) of ERISA (the “Equitable Relief Provision”) based on Manuel’s argument that the plan’s SPD omitted the pre-existing condition exclusion contained in the plan document that was the basis for Prudential’s denial of his benefits claim, and thus Manuel relied to his detriment on a deficient SPD. Citing Fifth Circuit and U.S. Supreme Court precedent under ERISA, the Fifth Circuit reiterated the standing rule that… Continue Reading

Sixth Circuit Decision Highlights Importance of Distributing Accurate SPDs

A recent case decided by the U.S. Court of Appeals for the Sixth Circuit provides yet another example of the importance of ensuring that plan documents and summary plan descriptions (“SPDs”) accurately and consistently describe plan benefits. In Pearce v. Chrysler Group LLC Pension Plan, the plan document provided that a participant who was not actively employed at retirement would be ineligible to receive an early retirement supplement. In contrast, the SPD stated that a participant did not need to be actively employed at retirement to remain eligible for the early retirement supplement. This discrepancy became an issue when an employee accepted a termination incentive, and the employer, relying on the language in the plan document, argued that this made the employee ineligible for the early retirement supplement. The employee requested that the lower court (i) grant equitable estoppel to prevent the employer from relying on the plan document, and… Continue Reading

Court Finds Plan Language Does Not Require a Second Level Appeal

In this case, the summary plan description (“SPD”) described a participant’s ability to submit a second level appeal for a denied benefits claim under an employer-sponsored group health plan subject to ERISA and stated that failure to submit such an appeal would constitute a waiver of the participant’s right to review the decision. In addition, the denial letter received by the participant stated that she had a right to request a second level appeal. However, the court found neither the plan document, SPD, or denial letter obligated the participant to file a second level appeal before filing a lawsuit, thus resulting in the court’s denial of the defendant’s motion for summary judgment for failure to exhaust the plan’s administrative remedies. This case highlights the importance of reviewing plan and related documents to ensure they expressly state that submitting a second level appeal is required before a lawsuit over a denied… Continue Reading

Ninth Circuit Finds Summary of Material Modifications Violates ERISA for Failure to Reasonably Apprise Participant

A participant exceeded the lifetime maximum limit on benefits under a retiree health plan and then sued the employer and third party administrator for failure to adequately disclose the lifetime limit. The employer maintained an active employee health plan and a retiree health plan. However, the employer only used one summary plan description (“SPD”) for both plans. The SPD consisted of the 2006 SPD and a series of summaries of material modifications (“SMMs”) describing amendments to the plans since 2006. A 2010 SMM applied to the active employee plan and the retiree health plan. It stated that items marked with an asterisk did not apply to retirees. A heading labeled “Health Care Reform*” contained an asterisk, but the layout of the SMM did not make it clear which of the subsequently described changes, including the removal of the lifetime limit, fell under this Health Care Reform heading and thus did… Continue Reading

Fifth Circuit Holds Disability Benefit Offset Inappropriate Because of Ambiguous Language in Summary Plan Description

Verizon maintained a long-term disability plan (the “LTD Plan”) insured through MetLife, who had the discretionary authority to interpret the LTD Plan and to adjudicate claims. In 2007, an employee became eligible to receive benefits under both the LTD Plan and a Verizon pension plan due to disability, and the employee elected to take his full pension benefit as a lump sum and then roll it over into an IRA in a direct trustee-to-trustee transfer. The LTD Plan’s summary plan description (the “SPD”) contained language stating that a participant’s long-term disability benefits “may be reduced by other sources of disability income,” including “pension benefits from a Verizon pension plan, if the beneficiary elects to receive them.” MetLife offset the participant’s monthly disability benefit by the amount of the pension benefit he had rolled over into his IRA. The participant appealed countering that because he would not actually receive any of… Continue Reading

Fifth Circuit Confirms a Summary Plan Description May Also Act as the Plan Document under ERISA

The U.S. Court of Appeals for the Fifth Circuit reiterated its prior determination that a Summary Plan Description (“SPD”) for an employer-sponsored, group medical plan subject to ERISA could also serve as the plan document, provided it contains all of ERISA’s written plan document requirements. The court further held that in this case the SPD’s reference to a non-existent plan document was not material or detrimental to the participant under the plan. Historically, “plan booklets” for medical plans have contained the relevant SPD provisions regarding the benefits payable and the procedures for filing claims for benefits. However, many of those booklets did not contain all of ERISA’s requirements for an SPD or for the written plan document, including claims appeals procedures and certain other provisions, such as funding sources, amendment and termination provisions, and other required details. As a result, we have consistently recommended that the plan booklet be carefully… Continue Reading

Court Holds that Benefit Denial Letters Must Disclose Limitations Period for Judicial Review

The Third Circuit U.S. Court of Appeals, in Mirza v. Insurance Administrator of America, Inc., recently held that a notice of benefit denial under ERISA must include a statement of any time limits for filing a claim for judicial review in order for such limits to be enforceable under ERISA. The claimant exhausted the internal appeals process under the employer’s group health plan and received a final benefit denial letter from the claims administrator. Although the letter included a statement of the claimant’s right to bring a civil action under Section 502 of ERISA, the letter did not mention the plan’s one-year limitations period for filing a lawsuit. The federal district court dismissed the lawsuit as being time-barred because notice of the limitations period was contained in the plan’s summary plan description (“SPD”). In reversing, the Third Circuit held that regardless of whether the claimant had notice of the plan’s… Continue Reading

Breach of Fiduciary Duty by Employer for Issuing Inaccurate SPD

A participant sued both his employer and the insurance company with respect to a long-term disability (“LTD”) policy that had been purchased by the employer. The participant alleged an ERISA breach of fiduciary duty for the failure to increase LTD benefits in accordance with the terms of the summary plan description (“SPD”). The U.S. Court of Appeals for the Sixth Circuit ruled that the employer (1) functioned as an ERISA fiduciary when it prepared and distributed the SPD to participants, and (2) breached its fiduciary duty by furnishing the participant with a misleading SPD. In particular, the SPD provision describing the annual increase in benefits did not refer to the other sections of the SPD on which the employer and the insurer had relied to deny the benefits increase. Also, the insurer’s self-serving interpretation of the SPD to deny increased benefits was determined to constitute a breach of the insurer’s… Continue Reading

September 2019
S M T W T F S
« Aug    
1234567
891011121314
15161718192021
22232425262728
2930  

Archives