This article has been published in “The Advocate”, a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, July-August 2011 issue,
@2011 by Steven J. Bruzonsky, Esq.
Cigna Corp. v. Amara: The Plan Document’s Subrogation Clause, Not the SPD,
is Key to ERISA Plan Subrogation Rights
The ERISA plan lien language was in the SPD (Summary Plan Description) but not in the Plan Document (sometimes referred to as the Master Plan or the General Plan), and the court held that the lien was not enforceable. Grosz-Salomon v. Paul Revere Insurance, 237 F.3d 1154 (9th Cir. 2001). In interpreting ERISA plan provisions, the court must consider all documents, including the Master Plan and the SPD, and any conflicts that cannot be harmonized and which favor employee will be construed in employee’s favor, citing Bergt v. Retirement Plan for Pilots Employed by Markair Inc., 293 F.3d 1139 (9th Circuit 2002). Providence Health Plans of Oregon v. Simnitt, 209 WL 700873 (Dist. Ct. Oregon) (March 13, 2009). In Cigna Corp. v. Amara, No. 09-804, 2011 U.S. Lexis 3540,563 U.S. ___ (5-16-2011) involved a dispute concerning Cigna Corporation’s pension plan. Of particular interest concerning ERISA liens, in this case, is the Court’s discussion regarding the plan’s Summary Plan Description: “Nor can the Court accept the Solicitor General’s alternative rationale that the District Court enforced the summary plan descriptions and that they are plan terms. That reading cannot be squared with ERISA §102(a), which obliges plan administrators to furnish summary plan descriptions, but does not suggest that information about the plan provided by those disclosures is itself part of the plan. Nothing in §502(a)(1)(B) suggests the contrary. The Solicitor General’s reading also cannot be squared with the statute’s division of authority between a plan’s sponsor – who, like a trust’s settlor, creates the plan’s basic terms and conditions, executes a written agreement containing those terms and conditions, and provides in that instrument a procedure for making amendments – and the plan’s administrator – a trustee-like fiduciary who manages the plan, follows its terms in doing so, and provides participants with the summary plan descriptions. ERISA carefully distinguishes these roles, and there is no reason to believe that the statute intends to mix the responsibilities by giving the administrator the power to set plan terms indirectly in the summaries, even when, as here, the administrator is also the plan sponsor. Finally, it is difficult to reconcile an interpretation that would make a summary’s language legally binding with the basic summary plan description objective of clear, simple communication.”
Thus, the U.S. Supreme Court makes it crystal clear that the Plan Document is the controlling document and must include the subrogation/lien terms; and that the SPD is merely a plan summary but not a binding document.
So make sure that you request and obtain from the ERISA Plan Administrator (in addition to other documents you may request) those documents proving that not only the SPD, but the Plan Document itself sets forth applicable subrogation/lien rights, including: (1)The SPD (Summary Plan Description which explains and summarizes plan benefits); (2) The Plan Document including but not limited to any subrogation and/or lien provisions; (3) If there is no Plan Document, other than SPD(s), request and obtain the document signed by the Plan Administrator which incorporates the SPD(s) into the Plan Document, or the document(s) which reference that the SPD(s) provisions are incorporated into the Plan Document; (4) Amendments to the Plan Document pertaining to the employer’s Medical Plan; and (5) The SMM (Summary of Material Modifications) statements I predict that ERISA plan attorneys will be scrambling to triple check the Plan Documents and ensure that that Plan Document subrogation provisions have been properly adopted; and that those of us plaintiff counsel willing to work “hard” on these ERISA lien claims will find that a fair number of Plans do not have proper documentation to show that SPD subrogation/lien provisions were ever formally adopted by the Plan, as opposed to being written into the SPD by the Third Party Administrator. And remember, even in those states which permit health insurance subrogation, that if the Plan Document doesn’t include an applicable subrogation/lien provision, then it is my view that under that state’s contract law there simply is no applicable subrogation/lien claim.