It is well known that in enacting the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et. seq., Congress set forth a requirement that a Summary Plan Description ("SPD") be furnished to participants and beneficiaries of ERISA plans. 29 U.S.C. § 1022. Congress requires that SPDs for ERISA plans, inter alia, be "written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise [the] participants and beneficiaries of their rights and obligations under the plan." § 1022(a). § 1022 also provides certain specific information that must be included in an ERISA governed SPD for the benefit and knowledge of the participants and beneficiaries. § 1022(b). The obvious reason for the SPD requirement is to ensure, to the extent reasonably possible, that plan participants and beneficiaries have informed and reasonable expectations of what their plans provide.
It is generally accepted in the world of ERISA policies and plans that where contradictions exist between a SPD and the plan itself, the SPD will control. See e.g. Chiles v. Ceridian Corp., 95 F.3d 1505 (10th Cir. 1996); Hansen v. Continental Insurance Co., 940 F.2d 971 (5th Cir. 1991); Atwood v. Newmont Gold Co., 45 F.3d 1317 (9th Cir. 1995). However, a more narrow question to be considered is what the effect is of an SPD that is silent as to terms that are contained within the ERISA plan. In such circumstances what will control, the terms of the plan, or the lack of a corresponding term in (i.e., silence of) the SPD? This question should be considered by all plan administrators and issuers of ERISA plans, although the answer is not entirely clear. Unfortunately this question may have a significant impact on the benefits to which a participant or beneficiary is entitled under an ERISA plan.
The Eleventh Circuit has held that when it comes to whether a SPD or the plan controls in the face of an existent contradiction between the two, it must be the SPD that controls. McKnight v. Southern Life and Health Insurance Co., 758 F.2d 1566 (11th Cir. 1985) (rejecting argument that the more specific plan provisions should trump less specific SPD provisions where a contradiction between the two appears to exist). The Eleventh Circuit reasoned, "[i]t is of no effect to publish a plan summary booklet designed to simplify and explain a voluminous and complex document, and then proclaim that any inconsistencies will be governed by the plan. Id. Under such a rule "[u]nfairness [would] flow to the employee for reasonably relying on the summary booklet." Id. Such a general rule tends to make logical sense, as to conclude otherwise could be deemed to "undermine ERISA's requirement of an accurate and comprehensive summary. Hansen, 940 F.2d 971.
In a recent opinion and order issued by District Judge Charles Lynwood Smith, Jr. of the Northern District of Alabama, Judge Smith broached the issue of silence in SPDs while he was considering the more common question of express contradictions between a particular disability plan and its SPD. See Gentile v. Kohler Co., 966 F.Supp.2d 1276 (N.D. Ala. 2013). In reaching his ultimate conclusion in that case, Judge Smith relied to some extent on the reasoning of two relatively recent district court decisions from outside of the Eleventh Circuit: Nash v. Mercedes-Benz USA, LLC, 489 F.Supp.2d 411 (D.N.J. 2007) and George v. Duke Energy Retirement Cash Balance Plan, 560 F.Supp2d 444 (D.S.C. 2008).
In Duke, Judge Smith found language that states that "[u]nder ERISA, fiduciaries may not make material misrepresentations to beneficiaries, or provide incomplete, inconsistent, or contradictory disclosures that misinform beneficiaries. (Emphasis supplied). The quoted portion of the Duke opinion cited by Judge Smith went on to state that the duty of the fiduciary in the ERISA context "entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful." Id. (internal cites and quotes omitted) (underline supplied). Thus, under the reasoning of Duke it would appear that failure to disclosure material terms in an SPD could be deemed to be a failure to comply with an affirmative duty to disclose terms that would be deemed important to the claimant.
In Nash the District of New Jersey provided that it is clear "that where [a] SPD is silent regarding additional requirements materially affecting the rights or obligations of a plan participant, such silence may essentially contradict or conflict with the terms of a plan." Nash, 489 F.Supp.2d 411. Nash does support that simple silence will not always be deemed contradictory, and in fact will virtually always be a necessary component of a SPD, as a SPD is meant to simply summarize a more detailed underlying plan. However, the Nash Court did recognize that there is an inherent difference in simple silence of terms, and silence that actually results in a contradiction with the underlying plan documents. Id.
Some courts in other circuits have effectively tried to limit the effect silence may have on a plan analysis, by expressly providing that in order for a SPD to control over a plan there must be an actual conflict between the plan and the SPD. See Charter Canyon Treatment Center v. Pool Co., 153 F.3d 1132 (10th Cir. 1998); Mers v. Marriott Intern. Group Accidental Death and Dismemberment Plans, 144 F.3d 1014 (7th Cir. 1998). Those courts have held that silence of a SPD is not a conflict, but rather is an inherent part of a SPD. Id. It would seem that those courts would look at silence in a SPD as contradictory from a skeptical vantage point.
Based on the language of McKnight and Gentile, and Judge Smith's reliance on the language of Nash and Duke discussed supra, it is unclear whether Eleventh Circuit courts would agree with the decisions of those courts mentioned above. While it would appear that Eleventh Circuit courts would likely still require an actual conflict to exist before finding that an SPD controls over the underlying plan, it also appears that the Eleventh Circuit would not consider silence of a SPD so axiomatically as not in conflict with the actual plan. The Eleventh Circuit appears to hold in high regard the principle that the SPD is to apprise, accurately and completely, the participants and beneficiaries of an ERISA plan.
Based on the foregoing, it remains clear that there is no bright-line test regarding the significance of silence in a SPD, or how such silence would be applied in the courts of the Eleventh Circuit. However, it does appear that a provision by provision comparison of the relevant portions of a SPD and plan should be made each and every time such a provision is at issue in an ERISA dispute. In such instances we suggest an analysis to determine whether an arguable conflict exists between the SPD and the plan. Moreover, where the SPD is silent as to terms contained in the plan itself, a review of whether such silence is contradictory is necessary.
While other factors could control—e.g., what if the SPD references and specifically directs the claimant to the provisions of the actual plan—a SPD silence analysis should be conducted, even to a minimal degree, in all ERISA disputes where a dispute as to the meaning of the plan's terms arises. Unfortunately, silence may not be silence and can lead to unintended consequences and benefits.