In Koehler v. Aetna Health, Inc., 683 F.3d 182 (5th Cir. 2012), the Fifth Circuit criticized a health insurer for having an SPD that mirrored the plan, and held that Cigna v. Amara did not prevent the terms of the SPD from impacting plan interpretation.

The plaintiff, a participant in an HMO, suffered from sleep apnea, for which her physicians recommended treatment by an outside specialist. Aetna denied covered for the treatment, asserting that the plan required pre-authorization for an outside referral. The parties’ dispute centered around a specific provision in the Certificate of Coverage (“COC”), which the court found was ambiguous with respect to the need for pre-authorization for outside services rendered on an ad hoc basis.

The court noted at the outset something that is common in recent-vintage plans: the plan functions as an SPD. As the court explained: “in addition to appearing in the plan, the COC’s text also constitutes the ‘summary plan description’ which ERISA requires plan administrators to provide to participants and beneficiaries. Thus, although a plan summary is a separate document from the plan itself, in this case the summary’s text is simply a verbatim copy of the underlying plan provisions.”

The court next noted that, although Aetna had discretionary authority to interpret the plan (and therefore “discretion to resolve ambiguities in the plan language in its favor”), its “discretion to resolve ambiguities in the plan does not extend to the plan summary, notwithstanding that in this instance the summary is a verbatim copy of text in the plan [emphasis by the court].” The court continued that ambiguities in an SPD must be resolved in favor of the beneficiary, because SPDs are to be written in a manner to be understood by the average participant. On this basis, the court held:

Therefore, when considering the COC as a plan summary we must resolve its ambiguity against requiring pre-authorization of ad hoc outside services. That of course diverges from the interpretation Aetna has given to identical language in the underlying plan. If that outcome seems puzzling, the anomaly is traceable to Aetna’s curious decision to use identical language in both plan and plan summary—documents that serve quite different functions and are accordingly subject to differing interpretative standards.

Thus, the court held, a plan administrator or fiduciary can effectively lose the discretion to interpret a plan if the same language is included in the SPD.

The court held that Cigna v. Amara did not prevent this result, even though Amara held that “the text of § 1132(a)(1)(B) does not authorize courts to enforce the terms of a plan summary[.]” The Fifth Circuit explained its reasoning as follows:

Section 1132(a)(1)(B) does, however, allow courts to “look outside the plan’s written language in deciding what those terms are, i.e., what the language means ….” CIGNA, 131 S Ct. at 1877. Also, even if the plan’s language unambiguously supports the administrator’s decision, a beneficiary may still seek to hold the administrator to conflicting terms in the plan summary through a breach-of-fiduciary-duty claim under § 1132(a)(3). CIGNA, 131 S.Ct. at 1878–82.138910

Thus, CIGNA changes our case law to the extent that the plan text ultimately controls the administrator’s obligations in a § 1132(a)(1)(B) action, but CIGNA does not disturb our prior holdings that (1) ambiguous plan language be given a meaning as close as possible to what is said in the plan summary, and (2) plan summaries be interpreted in light of the applicable statutes and regulations.

Here, the court held, ERISA regulations required the SPD to include either the pre-authorization requirement or a reference to where it could be found in close conjunction with the description of benefits. Having failed to do that in the SPD, Aetna could not interpret the plan as requiring pre-authorization.

The court also gave weight to the apparent fact that the plaintiff’s doctors, who were part of the HMO, did not know of the pre-authorization requirement. The court observed that “it smacks of bad faith to invoke pre-authorization if that requirement is unknown to both doctors and patients in the HMO.” It did, however, state that it was not finding bad faith, nor was it requiring the district court to consider bad faith on remand.

Finally, the court instructed the district court on remand to consider Aetna’s argument that the plaintiff had failed to exhaust her administrative remedies. Though it said that it was not pre-judging that defense, it noted that, if the plan failed to establish or follow reasonable claims procedures, the plaintiff would be deemed to have exhausted her administrative remedies. It then stated: “It is difficult to see how Aetna’s leaving both Koehler and her doctors ignorant of the pre-authorization requirement would not ‘inhibit or hamper[ ]’ her from initiating the procedures necessary for her to realize her entitlements under the plan” which presumably would make its claim procedures unreasonable.