SPDs and ERISA Benefit Rights

In Fulghum v. Embarq Corp., the U.S. Court of Appeals for the Tenth Circuit ruled that a summary plan description (SPD) is part of the plan when neither party asserts that the SPD conflicts with the terms of the plan, contains terms unsupported by the plan, or contains provisions not authorized by or made part of the plan.   In 2011, the U.S. Supreme Court ruled in CIGNA v. Amara that plan terms determine benefits.  Many saw Amara as cutting back on the ability of participants to claim that SPDs can provide benefits.  (Some rulings had held that SPD terms could override inconsistent plan terms.)  If Fulghum is good law, it places the SPD back in a position to supply benefit rights, at least where the defendant does not argue that the SPD conflicts with plan terms, contains terms unsupported by the plan or contains terms not authorized by or made part of the plan.  The Fulghum court applied a contract analysis to SPD terms to determine the participants’ rights.  So, the Court analyzed the words of the SPD and determined if they supported the plaintiffs’ claims.  Many welfare plans (e.g.., health plans) “wrap” the SPD into the plan, thereby potentially making the SPD’s terms the basis for benefit recovery.  In contrast, retirement plans ordinarily do not wrap the SPD into the plan document.  Thus, the likelihood of an SPD playing a role in a pension claim are much less than the likelihood of an SPD playing a role with respect to a welfare benefit claim.  Note:  A 2014 Sixth Circuit Court of Appeals case, Adams v. Anheuser-Busch Companies, Inc., held that when plan terms are undefined, the plan administrator should interpret the provisions according to their plain meaning in an ordinary and popular sense.