Its not enough to simply post a summary plan description on an employers intranet to satisfy the ERISA requirement that such information be furnished to plan participants. Thats the conclusion that the U.S. District Court for the Eastern District of New York came to in Raymond Thomas v. CIGNA Group Insurance, et al. (No 09-CV-5029).
The case involved a denial of payment of death benefits from a voluntary group life plan. The plaintiff was the brother of Judith Thomas, the deceased employee. He originally sued the life insurance carrier in 2009, and it has taken six years for the case to be resolved.
The story begins in 2002, when the deceased employee began working for Countrywide Financial Corp. As an employee she automatically received a basic life policy, but she also opted for Countrywides voluntary plan, which required regular contributions to cover premiums.
Waiver request requirement
Two years later, in 2004, Judith stopped working, on the basis of disability, and never returned to work. She died in 2008. A waiver-of-premium provision was available to employees who were forced to quit their jobs due to disability. However, in order to be qualify, an employee must submit due proof that he or she has been Disabled for the Benefit Waiting Period shown in the Schedule of Benefits for this benefit. Such proof must be submitted to the Insurance Company no later than three months after the Employee satisfies the Benefit Waiting Period, according to the policy terms.
After the claim for benefits was filed by a Countrywide benefits specialist on behalf of the deceased employees brother, a CIGNA claims representative asked why the required waiver-of-premium request had not been filed. The beneficiary replied that his sister never received any information from Countrywide nor CIGNA regarding a contract or policy explaining Waiver of Premium standard or an explanation of same.
The senior benefits representative at Countrywide who had filed the claim on behalf of the policys beneficiary, was later asked by a waiver specialist at the life insurance about how employees were informed about the waiver requirement. Her response included the following statement:
The oldest information I could find was from 2004. This was posted along with several hundred other pages of information regarding Countrywide's various benefits on the Intranet system. Due to the volume of information on the Intranet system, employees rarely read every page of the information available and rely on benefit summaries to advise them of any action required regarding any change in status. And as mentioned previously, Judith would not have had access to this information once she went out on leave.
That statement contributed to the judges ultimate decision that simply posting an SPD on an employers intranet does not satisfy ERISAs requirements to notify employees of their rights and obligations. Materials which are required to be furnished to all participants must be sent by a method or methods of delivery likely to result in full distribution, the court concluded.
Commenting on the case, the Wagner Law Group, an ERISA specialty firm, told clients that if they rely on electronically distributing ERISA disclosures, including SPDs, that they must be cognizant that failure to comply withy DOL rules can be a costly mistake. The firm urged employers to periodically review their electronic distribution processes to assure that they are adequate and that they are being followed.
Richard Stolz is a freelance writer based in Rockville, Maryland.
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