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Summary Plan Descriptions and Language of Discretion after <i>CIGNA Corp. v. Amara</i>

Summary Plan Descriptions and Language of Discretion after CIGNA Corp. v. Amara

ERISA and Life Insurance News
(December 2013)

In CIGNA Corp. v. Amara, 563 U.S. __, 131 S.Ct. 1866, 1878 (2011), the Supreme Court concluded that summary plan descriptions, "important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan for purposes of § 502(a)(1)(B)."

Since Amara, the lower courts with relative uniformity have declined to give effect to a grant of discretion found in a summary plan description but absent from the plan document. See, e.g., Ingorvaia v. Reliastar Life Ins. Co., __ F. Supp. 2d __, 2013 WL 2006689, at *2 (S.D. Cal. May 14, 2013) ("where the SPD is not incorporated, or the plan is not otherwise amended to include the SPD's terms, the SPD's terms are not binding"); Messer v. Prudential Life Ins. Co. of Am., 2013 WL 1319391, at *8 (W.D.N.C. Mar. 29, 2013) ("the SPD is not part of the Plan and therefore cannot grant discretionary authority to the administrator.")

Indeed, even before Amara, a number of circuit courts had refused grants of discretionary authority contained only in the SPD.

These courts held "that a grant of discretion to the plan administrator, appearing only in a summary plan description, does not vest the administrator with discretion where the policy provides a mechanism for amendment and disclaims the power of the summary plan description to alter the plan." Jobe v. Medical Life Ins. Co., 598 F.3d 478, 484 (8th Cir. 2010).


This general principle is not without some exceptions. Thus, for example, where the SPD is actually part of the plan, the language of discretion in that document may be given effect. Eugene S. v. Horizon Blue Cross Blue Shield of N.J., 663 F.3d 1124, 1131 (10th Cir. 2011) ("the insurer must demonstrate that the SPD is part of the Plan, for example, by the SPD clearly stating on its face that it is part of the Plan").

The terms of the SPD may be enforced where there is no "master plan document" and "the SPD is the plan." Henderson v. Hartford Life and Acc. Ins. Co., 2012 WL 2419961, at *5 (D. Utah June 26, 2012); but see Wilson v. Walgreen Income Protection Plan for Pharmacists and Registered Nurses, Walgreen Co., 2013 WL 1799599 (M.D. Fla. Apr. 29, 2013) (rejecting argument that language of discretion in SPD applied because it was the only plan document, where the SPD "did not conform to all of the requirements of section 1102(b)").

Related to this, some post-Amara decisions have applied language of discretion found in documents other than the "plan document." In Maly v. Trustees of Local 309 Wireman's Pension Trust, 2013 WL 1317970 (E.D. Mo. Mar. 29, 2013), for example, the court found effective a grant of discretion contained in both the trust and the SPD where it was nonetheless absent from the plan document. "The primacy of the Trust over other Plan Documents," the court reasoned, "is expressed in . . . the Plan which provides that ‘the Plan may be amended at any time in accordance with the Trust Agreement.'" Maly, 2013 WL 1317970, at *5.

Similarly, in Ehas v. Life Insurance Company of North America, 2012 WL 5989215 (N.D. Ill. Nov. 29, 2012), the court concluded that language of discretion appearing in both the SPD and an "Appointment of Claim Fiduciary" document would have resulted in deferential review, absent a state insurance regulation prohibiting discretionary clauses. The court rejected the argument that Amara significantly undercut earlier Seventh Circuit precedent in Raybourne v. Cigna Life Insurance Company, 576 F.3d 444 (7th Cir. 2009), where the court gave effect to a grant of discretionary authority contained in a Claim Fiduciary Agreement.

"Although Amara made clear that the terms of an SPD are not synonymous with the terms of the plan," the court in Ehas wrote, "Plaintiff goes too far in arguing that this conclusion – which the Court made in the context of addressing the larger issue of the propriety of the district court's remedy under ERISA – is at odds with Raybourne." Ehas, 2012 WL 5989215, at *4.

By contrast, the court in Rada v. Cox Enterprises, Inc., 2012 WL 3262867 (D. Nev. Aug. 7, 2012), declined to apply a grant of discretion found in an administrative services contract. Citing Amara, the court held that a "document that is not ‘itself part of the plan' cannot confer discretionary power on an entity." Rada, 2012 WL 3262867, at *4. Rather, such documents have been upheld "only when they are integrated with the plan itself in some way," the court wrote. Id. The administrative services contract, according to the court, was "not part of the plan, integrated or otherwise, and is not distributed to employees." Id. That last phrase – "not distributed to employees" – leads to another issue.

When the SPD is Silent

Even after Amara, the notion of looking at "a series of documents" to find discretion may retain some viability. As a general proposition, however, the absence of discretionary language in the plan document itself is at least going to complicate the standard of review argument. What about the converse situation? What is the result now when the plan document contains a clear grant of discretion but the SPD is silent? Related to that, what is the effect of a failure to distribute an SPD or other document containing the grant of discretion? In short, what are the notice requirements for grants of discretionary authority?

Historically, many courts held that "where the plan documents and the summary plan description conflict, the SPD controls." Tocker v. Philip Morris Cos., Inc., 470 F.3d 481, 487 (2d Cir. 2006). Nonetheless, many courts have been untroubled by the absence of discretionary language in an SPD when the plan document contained such language.

In Tocker, for instance, the Second Circuit held that "the level of discretion reserved to a plan administrator is not a ‘condition [ ] which must be met before a participant will be eligible to receive benefits,' 29 C.F.R. § 2520.102-3(j)(1)." 470 F.3d at 488. "Nor is it a circumstance which may result in denial of benefits within the meaning of 29 U.S.C. § 1022(b)," the court reasoned. Id.

Moreover, the participant was unlikely to show prejudice resulting from the absence of the language. Id., citing Mario v. P & C Food Markets, Inc., 313 F.3d 758, 764 (2d Cir. 2002) (the standard of review "simply fixes the procedure to be followed after a denial has occurred, and therefore a plan participant cannot be prejudiced by a lack of knowledge about that procedure").

The absence of notice was a problem for the court in Mangum v. Metropolitan Life Insurance Company, 2011 WL 466814 (D. Ore. Feb. 4, 2011), where the court refused to give effect to a grant of discretion contained only in an SPD that was not distributed to the participant. "[T]he SPD is the primary way in which plan participants are apprised of their rights and obligations under the contract," the court wrote. Mangum, 2011 WL 466814, at *3.

The absence of notice – in a different sense – was also at issue in the Seventh Circuit's decision in Herzberger v. Standard Insurance Company, 205 F.3d 327, 331 (7th Cir. 2000), where the court went so far as to draft "safe harbor" language of discretion for use by plan employers in plan creation. The "satisfactory proof" language of the plan at issue in that case was insufficient and did "not give the employee adequate notice that the plan administrator is to make a judgment largely insulated from judicial review by reason of being discretionary," the court reasoned. 205 F.3d at 332. The court then added: "The employees are entitled to know what they're getting into, and so if the employer is going to reserve a broad, unchanneled discretion to deny claims, the employees should be told about this, and told clearly." Id. at 333.

Actual Notice is Unnecessary

Relying on this language from Herzberger, a claimant argued that de novo review was appropriate because she did not receive the plan documents containing a grant of discretion. In Thurber v. Aetna Life Insurance Company, 712 F.3d 654 (2d Cir. 2013), the Second Circuit rejected that argument and rendered a decision that will be helpful in countering arguments against deferential review based upon a putative lack of notice, whether it results from a silent SPD or the inability to prove that the participant received the applicable plan documents.

The participant in Thurber brought an action against Aetna following the company's denial of her claim for long term disability benefits. Exercising a deferential standard of review, the district court entered summary judgment in favor of Aetna on the plaintiff's benefits claim. On appeal, the plaintiff asserted that she never received the plan documents which contained the grant of discretionary authority to Aetna and that her claim should have been reviewed on a de novo basis as a result.

Both the plan document and the summary plan description contained sufficient language of discretion, a fact conceded by the plaintiff at oral argument. Nonetheless, she argued that there was no evidence that she received anything other than a booklet which did not contain such language. Relying upon Herzberger, the plaintiff argued "that she must have received actual notice of Aetna's reservation of discretion before Aetna's denial of benefits is entitled to deferential review." 712 F.3d at 659.

The court disagreed with the plaintiff's argument, noting that Herzberger "did not in any way involve, and the court's language did not address, a situation in which the plan's language did unambiguously provide for discretion (as did the SPD), but the employee seeking benefits had not received a copy of either document." Id. "That a court will review benefits determinations de novo unless the plan documents clearly specify a reservation of discretion," the court continued, "does not imply that such a reservation must be specifically conveyed to all members of the plan." Id. If the Herzberger decision could be interpreted as the plaintiff suggested, the court wrote, "we cannot detect any basis in law or the statute to support this position." Id.

Further explicating its position, the Second Circuit pointed out that the Supreme Court's decision in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) had said "nothing about whether the SPD or other plan documents must contain language clearly reserving discretion – Firestone refers to the plan itself." Id. Moreover, "although plan participants are entitled to receive copies of the SPD . . . , the administrator of an ERISA plan has no obligation to ensure that participants receive copies of the plan itself." Id.

The issue thus devolved to whether
ERISA required the SPD to contain the language relative to the standard of review. Barring that, the court saw "no reason why a plan administrator must actually notify a participant of its reservation of discretion." Id. "ERISA contains no such edict," the court concluded. As a result, that Thurber "did not have actual notice of Aetna's reservation of discretion [was] of no consequence." Id.

Addressing potential policy arguments, the Second Circuit acknowledged the possibility of "strong arguments that plan provisions that affect the basic terms of the plan, or ones that affect what an applicant must do to become eligible for benefits, should be conveyed directly to plan beneficiaries and not buried in a lengthy and technical contract." Id. at 659-60. Such arguments, the court reasoned, "do not apply to a provision that is effectively addressed not to the beneficiary, but only to a reviewing court that must act only after an application has been denied." Id. at 660. But see Cosey v. Prudential Ins. Co. of Am., 735 F.3d 161 (4th Cir. 2013) ("It is critical that employees understand the broad range of a plan administrator's authority....").

Uniformity of application was also important to the court. Thus, "a standard that focuses on the language of the plan raises a purely legal standard of review for all participants in the same plan." Id. "In contrast," the court noted, "an actual notice standard would make the standard of review different for each individual applicant, based on resolution by reviewing courts of factual disputes – which will frequently pit a participant's fallible and self-interested memory against a plan administrator's reliance on evidence of standard practice – about whether the particular participant received a copy of the relevant documents." Id.

The Supreme Court's decision in Amara played no stated role in the Second Circuit's Thurber decision and indeed was not mentioned. The Court's statements in Amara, however, concerning the role of the summary plan description would only seem to support the rationales underlying the later decision.


The Amara decision reinforces the wisdom of making certain that any grant of discretionary authority is included in the official plan document. Room may remain for arguments in support of discretionary language contained in other documents, particularly where those documents are integrated into the plan by reference. The surest practice, however, is inclusion in both the plan and summary documents where possible. In the event of omission from the summary plan description, or absence of proof of notice to plan participants, the recent Second Circuit opinion in Thurber and decisions like it provide strong arguments for a deferential standard of review notwithstanding.

Click here to view the full December 2013 Edition of the ERISA and Life Insurance News.

H. Sanders Carter
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Kenton J. Coppage
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Dorothy H. Cornwell
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