In 2011, the Supreme Court clearly held that a summary plan description cannot trump the terms of an ERISA plan, overturning the rule in many circuits. Instead, the Amara rule provides that the plan itself governs over a summary of the plan when the two conflict.
This does not mean that an SPD is meaningless. The continued importance of preparing and distributing SPDs is nicely illustrated by Liss v. Fidelity Employer Servs. Co. LLC, 2013 WL 677280 (6th Cir. Feb. 26, 2013).
Liss involved a dispute over the identity of the beneficiary of a Savings and Stock Investment Plan (“SSIP”) established by Ford Motor Company. Under the terms of the SSIP, if an SSIP participant was unmarried, and also participated in the employer’s group Life Insurance Plan (“Life Plan), then the SSIP assets would be distributed to the beneficiary of the Life Plan, unless the participant designated a different beneficiary for the SSIP Plan.
The participant, McDonald, was unmarried and had designated her nieces as beneficiaries of the Life Plan. At some point before her death, McDonald told her attorney that she wanted Liss to be the beneficiary of the SSIP. The attorney obtained a beneficiary designation form from the website of Fidelity, the SSIP trustee, and sent the completed form to the “Fidelity Retirement Plan.” Three days after McDonald’s death, Fidelity wrote McDonald informing her that the form she submitted was not the valid beneficiary-designation form. Ford, as plan administrator, instructed Fidelity to pay the SSIP benefit to the nieces. Liss sued challenging the determination.
The SSIP requires a participant to “file in such a manner and in such form … as the Administration Committee shall specify a written designation of a beneficiary….” The SPD for the SSIP provides: “You may name a beneficiary for your SSIP account by completing a SSIP—Alternative Designation, Change or Revocation of Beneficiary Form. … The completed form must be forwarded to MetLife [the Life Plan insurer], using the address printed on the form.” McDonald thus submitted the wrong form, to the wrong entity.
Liss argued first that, under Cigna v. Amara, the SPD cannot trump the terms of the SSIP, so the requirement of sending a specific form to a specific place is not enforceable. The Sixth Circuit rejected this argument, holding that Amara “does not … preclude applying the SPD terms requiring the form to be used and where to send the form.” The court explained that the SPD did not contradict the SSIP – the SSIP authorized the Administration Committee to specify the manner and form for designated a beneficiary, and the Committee did so in the SPD. The court also held that, even after Amara, the SPD is still “one of the documents or instruments governing the plan,” and, while it did not establish the terms of the SSIP, it did communicate to participants how to implement an SSIP term. Thus, the court held that the Administration Committee reasonably determined that McDonald had not properly designated Liss as beneficiary.
However, Liss also argued that Ford did not establish that it had ever given the SPD to McDonald. Initially, the court noted that Liss had never raised this argument on administrative review, but it found that she did not waive the argument, because “[n]othing in ERISA or the governing documents in the case at hand, the SSIP and SPD, requires Liss to raise every issue before the Committee.” Given that Liss had not raised this argument previously, it is not surprising that Ford had not introduced evidence of the delivery of the SPD. Accordingly, the court remanded the case to the Administrative Committee “to develop the record on the issue of whether the SPD was properly furnished to McDonald.
This case is essentially the reverse of what one typically sees in litigation: the administrator was seeking to enforce the SPD while the claimant was seeking to enforce the plan. The takeaway from Liss is that the SPD can still play an important role in ERISA disputes, and that a well-drafted, and well-integrated, plan and SPD will minimize successful challenges to plan determinations.