Court: District Court, D. New Hampshire; January 4, 2012; Federal District Court
A claimant under the Employment Retirement Income Security Act (ERISA) is generally required to exhaust administrative remedies before filing a lawsuit. The issue at hand is whether a claimant must adhere to an administrative appeal process outlined in the Summary Plan Description (SPD) but not in the official plan document.
Deborah J. Kaufmann, who worked at Goss International Americas Inc., received Short Term and then Long Term Disability (LTD) benefits after leaving work due to medical issues. Her LTD benefits were terminated by Prudential Insurance Company on February 23, 2006, for a determination of non-disability. Kaufmann was informed of her right to appeal within 180 days, but her attorney only communicated a request for documents on August 21, 2006, without submitting a formal appeal until February 17, 2009, well past the deadline. Consequently, Prudential refused to consider the untimely appeal.
The foundational plan documents do not mandate the exhaustion of appeals before seeking judicial relief, indicating that legal action can commence 60 days after a claim is made and within three years thereafter. The SPD, while not part of the Group Insurance Certificate, specifies that claimants may appeal denied claims within 180 days and delineates procedures for appeals, stating that if a claimant opts to pursue litigation without a second appeal, the plan cannot claim that administrative remedies were not exhausted.
Summary judgment is warranted when there is no genuine dispute over material facts and the movant is entitled to judgment as a matter of law, as per Federal Rule of Civil Procedure 56(a). Evidence must be viewed favorably towards the nonmoving party, allowing for reasonable inferences. The moving party must first demonstrate the absence of material fact issues; if successful, the burden shifts to the nonmoving party to present evidence supporting a reasonable finding in their favor.
Prudential's motion for summary judgment is based on Kaufmann's failure to meet the 180-day administrative appeal period outlined in the Summary Plan Description (SPD). Kaufmann argues the appeal period is unenforceable because it was not properly included in the plan. The court agrees with Kaufmann, emphasizing that under ERISA, every plan must be established through a written instrument to inform employees of their rights and obligations. This requirement aims to ensure clarity in benefit administration. The written plan must detail basic terms and conditions, including appeal procedures for denied benefits. The relevant law mandates that plans provide participants with a fair opportunity to review denied claims. In this case, the written plan lacks specific appeal procedures, instead allowing lawsuits 60 days after claim proof submission and within 3 years unless stated otherwise by federal law. Prudential concedes that the SPD is the only document outlining appeal procedures, but contends these provisions represent the plan's terms, a position the court finds untenable for several reasons.
The SPD (Summary Plan Description) explicitly states that its provisions are not part of the Plan. The Supreme Court in Amara clarified that while summary documents are important for communicating with beneficiaries, they do not constitute the terms of the plan itself. The Plan administrator cannot amend the Plan by including appeal procedures solely in the SPD, as this action lacks authority under ERISA, which reserves the power to set plan terms for the plan sponsor in the written instrument. Although the same entity serves as both the Plan sponsor and administrator, ERISA maintains a clear distinction between these roles. Consequently, the SPD cannot impose procedures not outlined in the Plan’s written instrument. In this case, since the Plan does not mandate administrative appeals prior to litigation, the SPD's provisions on appeal procedures are ineffective. Prudential's argument that it was only required to include these procedures in the SPD is unconvincing; while regulations require claims procedures to be described in the SPD for clarity, they must also be part of the written Plan. ERISA mandates that the SPD inform participants of their rights and remedies under the Plan, reinforcing that information in the SPD cannot replace or create terms in the written instrument. Other courts have similarly ruled that provisions in the SPD not reflected in the written Plan are unenforceable.
In Shoop v. Life Ins. Co. of N. Am., the court determined that the Summary Plan Description (SPD) could not impose procedural requirements not contained in the actual Plan document, specifically regarding the defendant's discretion in interpreting policy terms and the administrative appeal process. The absence of language in the Plan that aligns with the SPD's provisions led to a conclusion that the defendant's interpretations were not entitled to deference and that mandatory appeal deadlines stated only in the SPD were unenforceable. Consequently, the plaintiff, Kaufmann, was not deemed to have failed to exhaust administrative remedies despite appealing after the 180-day deadline, as the appeal process was not established in the Plan itself. The court also addressed Prudential's standing as a defendant, affirming that it was appropriate to sue Prudential since it controlled the administration of the plan, even though Goss was identified as the Plan administrator in the SPD. Prudential's argument regarding enforceability of SPD provisions based on "significant reliance" was dismissed, as the cited cases did not support the notion that reliance on the SPD was required to contest discrepancies between the SPD and the Plan. The court ultimately denied Prudential's motion for summary judgment.
