United States Court of Appeals
FOR THE EIGHTH CIRCUIT
________________
No. 08-3505
________________
Ruth L. Jobe, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
Medical Life Insurance Company, *
Now known as Fort Dearborn Life * [PUBLISHED]
Insurance Company, *
*
Appellee. *
________________
Submitted: June 10, 2009
Filed: March 19, 2010
________________
Before BYE, HANSEN, and BENTON, Circuit Judges.
________________
HANSEN, Circuit Judge.
Ruth L. Jobe appeals the district court's ruling, on cross-motions for summary
judgment, rejecting her challenge of the denial of her claim for long-term disability
benefits. Jobe appeals both the district court's holding that the plan administrator was
entitled to discretion in adjudicating her claim and the court's holding that the
administrator did not abuse its discretion. We agree that the plan administrator was
not entitled to discretion, and we therefore reverse the district court's grant of
summary judgment and remand for the district court to review the administrator's
decision de novo.
I.
Jobe was employed by Lake Regional Health System as a medical
transcriptionist, and she became eligible for disability benefits under an insurance
policy issued by Fort Dearborn Life Insurance Company (Fort Dearborn).1 The
parties agree that the Fort Dearborn policy is part of a health and welfare plan ("the
plan") that is subject to the Employee Retirement Income Security Act of 1974, 29
U.S.C. § 1001 et seq. (ERISA).
As required by ERISA, 29 U.S.C. § 1102(a)(1), the plan is in writing. As is
often the case with ERISA plans, the plan is embodied in more than one document.
See Admin. Comm. of the Wal-Mart Stores, Inc. v. Gamboa, 479 F.3d 538, 542 (8th
Cir. 2007). The first plan document, called the Group Insurance Policy or the
"policy," defines key terms and explains the benefits of the plan. The policy contains
the following provision, which Fort Dearborn labels an "integration" clause:
COMPLETE CONTRACT - POLICY CHANGES
1. This policy is the complete contract. It consists of:
a. all of the pages;
b. the attached Application of the policyholder;
c. the participating employers' Applications for Group Voluntary
benefits; or
d. each Employee's application for insurance (Employee retains
his own copy).
1
As indicated in the caption, Fort Dearborn was formerly known as Medical
Life Insurance Company.
-2-
2. This policy may be changed in whole or in part. Only an officer or a
registrar of the Company can approve a change. The approval must be
in writing and endorsed on or attached to this policy.
3. Any other person, including an agent, may not change this policy or
waive any part of it.
(J.A. vol. II at 22.) The next clause of the policy informs the policyholder that the
insurer "will provide a Certificate to the participating employer for delivery to each
insured. If the terms of a Certificate and this policy differ, this policy will govern."
Id.
The certificate of coverage was provided to Jobe as part of a document titled
"Voluntary Long-Term Disability Insurance; Employee Benefit Booklet." (Id. at 28.)
The Employee Benefit Booklet describes the coverage provided by the policy.
Appended to the Employee Benefit Booklet is a page titled "ERISA Information
Statement." (Id. at 39.) The ERISA Information Statement provides:
The benefits described in your certificate and this ERISA Information
Statement (collectively the "Summary Plan Description" a/k/a the SPD)
are insured by a Policy issued by Medical Life Insurance Company. This
SPD describes the provisions of the Plan in effect as of the Effective
Date of the Policy. . . . In the case of any item not covered by the SPD,
or in the event of any conflict between the SPD and the Policy, the Plan
will always control. . . . Your right to any benefit depends on the actual
facts and terms and conditions of the particular Plan; no rights accrue by
reason of or arising out of any statement shown in or omitted from, this
SPD.
-3-
(Id.) The ERISA Information Statement also states that, "The Plan Administrator has
full discretionary authority and control over the Plan." (Id.) No such grant of
discretion appears in the policy.
While Jobe was enrolled in the health and welfare plan, she complained of
numerous physical ailments and eventually ceased working as a medical
transcriptionist. She filed a claim seeking long-term disability benefits. Fort
Dearborn employed a company named Disability RMS ("DRMS"), a third party
administrator, to process the claim. DRMS collected medical records from Jobe's
medical providers and engaged multiple health care professionals, including three
physicians and a vocational consultant, to review the record and to evaluate Jobe's
claim.
Ultimately, DRMS denied the claim and Jobe filed this lawsuit. The lawsuit
asserts that Fort Dearborn wrongfully denied Jobe benefits under the long-term
disability policy, in violation of ERISA. In the district court, both parties moved for
summary judgment. The district court held that the plan administrator's decision to
deny benefits was subject to review for an abuse of discretion. Finding no abuse of
discretion, the district court granted summary judgment in favor of Fort Dearborn.
Jobe appeals.
II.
"We review de novo the district court's summary judgment ruling and whether
the district court applied the appropriate standard of review to the administrator's
decision." Wakkinen v. UNUM Life Ins. Co. of Am., 531 F.3d 575, 580 (8th Cir.
2008) (citations omitted). The district court reviews the administrator's decision for
an abuse of discretion only "when an ERISA plan grants discretionary authority to the
plan administrator to determine eligibility for benefits." Id. (citing Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Jobe argues the district court should
-4-
have applied a de novo standard of review because the plan does not vest the plan
administrator with the power to exercise discretionary authority in making benefits
determinations.2 We agree.
III.
The dispute over the standard of review arises from the parties' conflicting
conclusions regarding the legal effects of the two documents that comprise the
ERISA-governed health and welfare plan. The policy is silent regarding the plan
administrator's discretion to determine eligibility for plan benefits, while the summary
plan description purports to grant such discretion. Jobe essentially argues that the
summary plan description—granting discretion where the policy is silent—amounts
to an unauthorized amendment of the policy in contravention of the procedures for
amendment laid out by the policy itself. The district court rejected Jobe's argument,
apparently favoring Fort Dearborn's proffered rationale that the summary plan
description is part of the ERISA plan documents, so no formal amendment was
necessary for the summary plan description to control.
Fort Dearborn's argument is premised upon this court's statement that summary
plan descriptions "are considered part of the ERISA plan documents." Jensen v.
SIPCO, Inc., 38 F.3d 945, 949 (8th Cir. 1994), cert. denied, 514 U.S. 1050 (1995).
To be sure, we have noted on more than one occasion that summary plan descriptions
form part of the written documents required by ERISA. See Gamboa, 479 F.3d at
544; Hughes v. 3M Retiree Med. Plan, 281 F.3d 786, 790 (8th Cir. 2002); Barker v.
Ceridian Corp., 122 F.3d 628, 633 (8th Cir. 1997); Jensen, 38 F.3d at 949. Although
Fort Dearborn contends that the summary plan description does not conflict with the
2
Jobe also argues that the abuse of discretion standard of review is not
applicable because an inherent conflict of interest existed and procedural irregularities
occurred, demanding the less deferential, de novo standard of review. In light of our
conclusion that the plan does not grant discretion, we do not address this issue.
-5-
policy, the company attempts to bolster the importance of the summary plan
description by pointing out that we have held that "[a summary plan description]
provision prevails if it conflicts with a provision of a plan." Jensen, 38 F.3d at 952.
As Fort Dearborn points out, we have held that a summary plan description
prevails in cases where the summary granted a beneficiary certain rights or privileges
that the policy did not. For example, in Marolt v. Alliant Techsystems, Inc., 146 F.3d
617, 621 (8th Cir. 1998), a summary plan description entitled the beneficiary to
"bridge" a break in her service time for retirement benefit purposes. The formal plan
document ruled out such bridging. Id. Based on the importance of disclosure to
employees, an objective underlying ERISA, we held that the summary plan
description governed and the beneficiary was entitled to the benefit of the bridging
provision. Id. ("The accessible provisions govern because adequate disclosure to
employees is one of ERISA's major purposes." (quotation and internal marks
omitted)). Fort Dearborn argues the same rule should apply in the converse situation,
where a summary plan description secures additional rights to a plan administrator.
Fort Dearborn cites only one prior opinion by this court that has held that a
summary plan description sufficed to secure rights to the plan administrator which
were not otherwise contained in a plan document. In Gamboa, we analyzed an
employer's right to recoup health care benefits the employer paid under a self-funded
ERISA health and welfare plan where the beneficiary later obtained a settlement from
a tortfeasor, arising out of the same accident. 479 F.3d at 540. The summary plan
description was the only plan document providing health benefits. Id. at 544-45. No
separate written policy existed. Id. Nonetheless, the employer provided over
$175,000 in health care benefits after a drunk driver injured the employee's spouse in
an auto accident. Id. at 540. The employee later settled with the tortfeasor for one
million dollars. Id. The summary plan description provided the employer the right
to recoup the benefits paid if the beneficiary later settled with the tortfeasor. Id. The
employee argued she did not need to repay the benefits because the reimbursement
-6-
provision appeared only in the summary plan description, not in a formal plan
document. Id. at 541. We held that "[w]here no other source of benefits exists, the
summary plan description is the formal plan document." Id. at 544. We also noted
that "if a dispute had arisen over the amount of benefits due, the [insurer] would no
doubt have been bound to provide benefits in accordance with [the summary plan
description]." Id. at 545. Such being the case, we reasoned that "what is good for the
goose is good for the gander" and refused to allow the employee, who had received
benefits by virtue of the summary plan description, "to deny the corresponding
responsibilities and obligations." Id. We reversed the district court's summary
judgment, allowing the employer's claim for reimbursement to go forward. Id. at 544.
Gamboa is distinguishable on two grounds. First, in Gamboa, there was no
written policy underlying the summary plan description. In light of ERISA's
requirement that such a writing exist, 29 U.S.C. § 1102(a)(1), we held the summary
plan description was the policy. Gamboa, 479 F.3d at 544. We also noted the obvious
inconsistency of the employee's attempt to avoid the adverse consequences of the
summary plan description while accepting the benefits only it provided. Id. at 545.
In contrast, a detailed written policy comprehensively delineates the rights and
responsibilities of the parties in this case. Jobe is not seeking benefits only available
through the virtues of the writing she simultaneously wishes to foreswear. For that
reason, Gamboa is not dispositive of the present question.3
3
In Groves v. Metropolitan Life Insurance Co., 438 F.3d 872, 874 (8th Cir.
2006), we also held a plan booklet, summarizing the plan, was sufficient to grant
discretionary authority to the plan administrator. Just as in Gamboa, however, the
record did not contain an underlying policy. Id. at 874 n.2. Similarly, in Jackson v.
Prudential Insurance Co. of America, 530 F.3d 696, 701 (8th Cir. 2008), we cited
Groves and applied a deferential standard of review. Jackson does not discuss the
underlying policy, and the issue of the proper standard of review was not raised
because the parties agreed as to the standard of review. Id. at 701 & n.6.
-7-
Perhaps more fundamentally, the distinct circumstances of this case implicate,
in a correspondingly distinct way, the ERISA requirements and ERISA's underlying
policies that originally led us to hold that a summary plan description can prevail over
a conflicting policy. From the very first time we indicated a summary plan description
provision would prevail over a conflicting policy provision, we justified the
proposition by reference to "the importance of disclosure to the [ERISA] statutory
regime." See Jensen, 38 F.3d at 952 (citing other circuit courts of appeals for the rule
but not applying it because the rule "does not apply when [as in Jensen] the plan
document is specific and the [summary plan description] is silent on a particular
matter"). The first decision to apply the rule and bind an employer to a promise made
in a summary plan description reasoned that "[a]dequate disclosure to employees is
one of ERISA's major purposes" and, "[b]ecause of the importance of disclosure, in
the event of a conflict between formal plan provisions and summary plan provisions,
the summary plan description provisions prevail." Barker, 122 F.3d at 633. Again,
in Marolt, we applied the rule where "[a] plan document required by law to be
plainspoken for the benefit of average plan participants, 29 U.S.C. § 1022(a)(1), and
furnished to participants, see id. § 1024(b)(1), says one thing, and an obscure passage
in a transactional document only lawyers will read and understand says something
else," and we held "[t]he accessible provisions govern because adequate disclosure to
employees is one of ERISA's major purposes." 146 F.3d at 621 (internal quotations
and marks omitted).
The disclosure purpose will not always be advanced, however, by holding that
the summary plan description prevails over the policy in all circumstances. Where the
entity seeking enforcement of the summary provision drafted the more detailed policy
and can be presumed to know its terms, allowing that party to rely on the summary
plan description—which it also drafted—would do little to enhance either party's
understanding of their legal rights and responsibilities. Conversely, the employee can
be expected to rely on the summary plan description. As we have said, a summary
plan description "'is intended to be a document easily interpreted by a layman; an
-8-
employee should not be required to adopt the skills of a lawyer and parse specific
undefined words throughout the entire document to determine whether they are
consistently used in the same context.'" Barker, 122 F.3d at 634 (quoting Chiles v.
Ceridian Corp., 95 F.3d 1505, 1517-18 (10th Cir. 1996)).
The circumstances of this case demonstrate how application of a rule that the
summary plan description always prevails will often contradict the rationale
supporting application of the rule in other contexts. Here, the two plan documents are
in conflict regarding the extent of the administrator's authority to interpret the plan.
Contrary to Fort Dearborn's contention, a grant of discretion to the administrator is a
critical provision. A full two decades ago, "the Supreme Court established that a
denial of benefits is to be reviewed under the de novo standard unless the plan gives
the administrator (or fiduciary) discretion to determine benefits and to construe the
terms of the plan." Schwartz v. Prudential Ins. Co. of Am., 450 F.3d 697, 698 (7th
Cir. 2006) (citing Bruch, 489 U.S. at 115). Thus, if no summary plan description
existed in this case, the default standard of review would be de novo. The policy does
not provide discretion, while the summary does. Thus, the two documents conflict.
If an employee, realizing the discrepancy and attempting to resolve it, were to
look elsewhere in the two plan documents, she could reasonably determine that the
documents uniformly tell her the policy prevails over the summary plan description.4
She could then look back to the policy and conclude—justifiably—that the
administrator possessed no discretion to interpret the policy and no entitlement to
4
The summary plan description provides: "In the case of any item not covered
by the [summary plan description], or in the event of any conflict between the
[summary plan description] and the Policy, the Plan will always control. . . . [N]o
rights accrue by reason of or arising out of any statement shown in or omitted from,
this [summary plan description]." (J.A. vol. II at 39.) Likewise, the policy provides:
"If the terms of a Certificate and this policy differ, this policy will govern." (Id. at
22.) The policy describes the certificate as a summary (id. at 3), and the summary plan
description includes the certificate (id. at 39).
-9-
deferential review. Thus, to hold that the summary plan description always prevails
over the policy—even where the summary plan description indicates the policy
prevails—would only invite further confusion for employees.
This illustrates that our cases holding that a summary plan description prevails
over the formal policy did not squarely address, and likely did not contemplate, the
situation presented here.5 In other words, whether a summary plan description
prevails over the formal policy where the summary grants to a plan administrator
rights not present in the formal policy, yet also indicates that the policy prevails if the
two documents conflict, is an issue of first impression in this circuit.
Other circuits have squarely confronted the question, and have done so in cases
that are factually analogous to this case. At least three circuits have held that a grant
of discretion to the plan administrator, appearing only in a summary plan description,
does not vest the administrator with discretion where the policy provides a mechanism
for amendment and disclaims the power of the summary plan description to alter the
plan. See Schwartz, 450 F.3d at 699; Shaw v. Conn. Gen. Life Ins. Co., 353 F.3d
1276, 1283-84 (11th Cir. 2003); Grosz-Salomon v. Paul Revere Life Ins. Co., 237
F.3d 1154, 1161-62 (9th Cir. 2001).6 We join our three sister circuits in holding that
5
In Sturges v. Hy-Vee Employee Benefit Plan & Trust, 991 F.2d 479 (8th Cir.
1993) (per curiam), we confronted an ERISA plan including a summary plan
description that restricted the employee's beneficiary's health insurance benefits. We
favorably cited Glocker v. W.R. Grace & Co., 974 F.2d 540, 542-43 (4th Cir. 1992),
for the proposition that "when [a] summary favors [the] employer, [the] employer
cannot disavow a disclaimer in the summary stating the plan controls." Sturges, 991
F.2d at 480-81. We agreed with the district court that the employer abused its
discretion in interpreting the plan to deny coverage based on the summary's restriction
of benefits. Id. at 480. Although Sturges appears to support our decision in this case,
its brevity makes it unclear whether the panel addressed the arguments made here.
6
In contrast, the court in Murphy v. IBM Corp., 23 F.3d 719, 721 (2d Cir.) cert.
denied, 513 U.S. 876 (1994), assumed that a grant of discretion in a summary plan
-10-
the summary plan description does not vest the administrator with discretion under
such circumstances.
In urging us to part ways with those circuits, Fort Dearborn views the summary
plan description to be a trump card. Under Fort Dearborn's view of ERISA, a formal
amendment was not necessary because the summary plan description is a plan
document, just like the underlying policy the summary describes. While that
conclusion is superficially congruent with our previous cases holding that a summary
plan description prevails over conflicting language in the policy, it loses sight of the
rationale underlying § 1022 and related case law. As we noted above, "one of
ERISA's central goals is to enable plan beneficiaries to learn their rights and
obligations at any time." Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83-84
(1995). The summary plan description is meant to further that goal. See id. (noting
the purpose of the summary plan description is "to communicate to beneficiaries the
essential information about the plan . . . 'written in a manner calculated to be
understood by the average plan participant.'" (quoting 29 U.S.C. § 1022(a)(1))).
"[T]he implication of § 1022 is that the [summary plan description] will be an accurate
summary, not an unnegotiated enlargement of the administrator's authority."
Schwartz, 450 F.3d at 700. Due to the policy's silence in the face of a decades-old
Supreme Court ruling establishing a default de novo standard of review, the summary
plan description does not summarize a provision of the policy related to discretion, but
instead enlarges the administrator's authority.
At the same time, Fort Dearborn's interpretation of § 1022 would undermine the
§ 1102(b)(3) requirement that each policy provide a mechanism for amendment.
ERISA requires every plan to provide a procedure governing amendment of the plan.
description sufficed to grant discretion. Sperandeo v. Lorillard Tobacco Co., 460 F.3d
866, 872 (7th Cir. 2006), describes Murphy as "assuming without analysis" that a
grant of discretion in a summary plan description is operative. Sperandeo also notes
Murphy "did not describe the remainder of the documents." Id.
-11-
29 U.S.C. § 1102(b)(3). In this case, the policy provided an amendment procedure.
ERISA, following trust law principles, mandates "that whatever level of specificity
a company ultimately chooses, in an amendment procedure or elsewhere, it is bound
to that level." Curtiss-Wright Corp., 514 U.S. at 85. Fort Dearborn does not argue
that the summary plan description provision putatively granting discretion amounts
to a procedurally proper amendment of the policy. To hold that the summary plan
description nonetheless granted the administrator discretion in this case would be to
endorse the practice of issuing ERISA policies that are silent on key provisions and
later issuing summary plan descriptions filling the gaps with terms favoring the
employer. While the Supreme Court has said the amendment requirement is not a
disclosure requirement, Curtiss-Wright Corp., 514 U.S. at 84, there would nonetheless
be little need to follow formal amendment procedures if key terms could be changed
by a summary plan description.
Rather than blindly apply a rule that the summary plan description always
prevails, we must give the language of the two documents a "common and ordinary
meaning." Barker, 122 F.3d at 632. We must construe the documents "as a
reasonable person in the position of the [plan] participant, not the actual participant,
would have understood the words." Id. The summary plan description expressly
states that no rights accrue by reason of the summary. We believe the average plan
participant would read that provision and conclude that the policy prevails if it
conflicts with the summary, and that the summary could not, standing alone, grant
Fort Dearborn the discretion it claims to have.
Fort Dearborn argues we should rebuff Jobe's attempt to rely on such an
"integration" clause to avoid application of rights found in a summary plan
description. While courts have rejected employers' attempts to use language
disclaiming employee rights and employer responsibilities granted in a summary plan
description, see, e.g., Pierce v. Sec. Trust Life Ins. Co, 979 F.2d 23, 27-28 (4th Cir.
1992), the same courts have allowed employees recourse to similar language and
-12-
justified their approach by reference to ERISA's goal that the summary plan
description accurately convey the employee's rights and responsibilities, see Glocker,
974 F.2d at 541-43.
Because the policy's failure to grant discretion results in the default de novo
standard, the policy controls over the inconsistent grant of discretion to the
administrator in the summary plan description. Accordingly, the administrator was
not entitled to discretionary authority in determining eligibility for benefits or
construing the plan's provisions. Consequently, the district court should not have
reviewed the administrator's decision for abuse of discretion but, rather, should have
reviewed it de novo. As the more deferential discretionary standard of review could
have affected any facet of the district court's analysis, we are far from certain the
district court would have arrived at the same conclusions applying a de novo standard
of review. See Wallace v. Firestone Tire & Rubber Co., 882 F.2d 1327, 1330 (8th Cir.
1989) ("As [the arbitrary and capricious standard] of review is interwoven into almost
all of the court's factual findings, we cannot be sure it would have made the same
factual conclusions if it had employed the required de novo standard of review."). The
district court is the proper forum to conduct the appropriate de novo review in the first
instance.
IV.
Accordingly, the judgment of the district court is reversed, and the case is
remanded for a de novo review of the plan administrator's decision.
_____________________
-13-