Two recent cases point out the importance of ERISA plan language.
In the matter of Wallace v. Oakwood Healthcare, Inc. (954 F.3d 879 (6th Cir. 2020)), the Sixth Circuit Court of Appeals determined that the plan language did not sufficiently put the participant on notice with regard to her rights under ERISA’s claims and appeal processes, as well as the requirement to exhaust all administrative processes prior to commencing litigation in an effort to receive benefits under the plan. Because the plan language had not been clear about these rights, the claims and appeals and administrative processes under the plan that had been available to the participant could not be enforced. Hence the claimant could proceed directly to litigation without following the employer’s internal processes. Avoiding this outcome could arguably reduce unnecessary expenses by resolving the matter before it reached the court.
In the matter of Lyn M. v. Premera Blue Cross (2020 WL 4249129 (10th Cir. 2020)), the Tenth Circuit Court determined that the plaintiff did not have adequate notice that the employer had the discretionary authority to determine benefits under the plan because a description of that standard of review was not made clear to the plaintiff. While the plan document in question contained the discretionary authority, it had not been included in the summary plan description which had been the only plan documentation provided to the plaintiff. The matter has been returned to a lower court for a de novo review of the facts in the case (which means that the lower court would be deciding the issues without reference to any legal conclusion or assumption made by the Tenth Circuit Court).
Both of these cases serve as good reminders to employers to make certain that they know the language of their plan, and that the terms and conditions of the plan are scrupulously followed.
The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.
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