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“ERISA Information” Section Not Enough to Grant Discretionary Authority – D. Or.

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  • “ERISA Information” Section Not Enough to Grant Discretionary Authority – D. Or.

    “ERISA Information” Section Not Enough to Grant Discretionary Authority – D. Or.

    Attached hereto is plan case out of the District of Oregon, Vaughn v. Hartford Life and Accident Insurance Company. The case involves a claim for long-term disability benefits. As a preliminary matter, the court was asked to determine the applicable standard of review. Plaintiff argued that the correct plan document for the court to look to was the one that was in effect when her disability claim was denied. She also argued that the “ERISA Information” section that granted discretionary authority to defendant was not part of the plan and, therefore, the appropriate standard of review was de novo. Defendant argued that the appropriate standard of review was an abuse of discretion because the applicable plan document was the one in effect when plaintiff stopped working, and that the “ERISA Information” section was a part of the plan. The court agreed with plaintiff and determine the appropriate standard of review was de novo.

    B. Analysis

    1. Applicable Plan.

    In order to determine the proper standard of review, the Court must resolve which version of the Plan is applicable to Vaughn's claim.

    The 2011 Certificate was the Plan in effect on March 4, 2013, when Vaughn applied for LTD benefits. Vaughn, however, contends her claim for wrongful termination of her LTD benefits accrued on the day that her benefits were terminated, which the parties acknowledge occurred in November 2017. Thus, Vaughn asserts the relevant Plan is the one in effect when Hartford terminated Vaughn's LTD benefits in November 2017, which was the 2013 Certificate.

    In Grosz-Salomon v. Paul Revere Life Insurance Company the Ninth Circuit determined which one of two policies controlled and the applicable standard of review. 237 F.3d 1154 (9th Cir. 2001). In Grosz-Salomon an employee challenged the disability insurer's termination of her benefits. The policy in effect when the employee applied for and was granted benefits did not contain a discretionary authority provision. Subsequently, the benefits plan was amended to include a discretionary authority provision and that plan was in effect when the insurer terminated the employee's benefits. The district court did not resolve whether the amended plan language controlled because the court concluded the abuse-of-discretion standard of review applied in any event and that the insurer's denial of the plaintiff's claim constituted an abuse of discretion.

    Ultimately the Ninth Circuit held an ERISA cause of action based on a denial of benefits accrues at the time the benefits are denied; i.e., the plaintiff's cause of action accrued under the policy in effect at the time her benefits were denied, and that policy determined the appropriate standard of review. Id. at 1159-61. See also Bolton v. Constr. Laborers' Pension Tr. for So. Cal., 56 F.3d 1055, 1058 (9th Cir. 1995)(under ERISA a widow's cause of action for spousal benefits accrued when she was denied those benefits).

    Here, at the time that Hartford terminated Vaughn's benefits in 2017, the 2013 Certificate was the Plan in effect. Thus, the Court concludes on this record that Vaughn's cause of action accrued under the 2013 Certificate, which does not grant Hartford the discretionary authority to terminate Vaughn's benefits.

    2. The ERISA Information is not part of the governing Plan.

    Hartford, nevertheless, argues regardless which Plan applies, the language in the "ERISA Information" accompanying both Certificates grants Hartford discretionary authority. In response Vaughn contends the ERISA Information is not part of the Plan and should not be considered when determining whether Hartford had discretionary authority.

    The Supreme Court has held a summary plan description that contains information "about the plan" is not itself "part of the plan." Cigna Corp. v. Amara, 563 U.S. 421, 436 (2011).

    Here the ERISA Information sheet that accompanies both the 2011 Certificate and the 2013 Certificate is identical. As the Supreme Court found in Cigna, however, the ERISA Information is merely a description of the Plan, but it is not part of the Plan. As noted, the language of the actual Plan was modified in December 2013 and does not grant Hartford discretionary authority.

    The Court notes, nevertheless, that even if it were to conclude the ERISA Information was part of the plan, there would be a conflict between the ERISA Information and the 2013 Certificate itself as to whether Hartford had discretionary authority. Such an ambiguity does not meet the requirement that if a plan grants an insurer discretionary authority, it must grant such authority clearly and unambiguously. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). See also Thomas v. Oregon Fruit Prod. Co., 228 F.3d 991, 993 (9th Cir. 2000)(same).

    On this record, therefore, the Court finds the ERISA Information is not part of the Plan and does not govern the standard of review.
    Attached Files
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