Labor & Employment Blog

8th Circuit says ERISA Plan Doc trumps SPD

Posted April 30, 2010

Author: Tod D. Yeslow

On March 19, 2010, the US Circuit Court issued its opinion in Jobe v. Med. Life Ins. Co., 2010 WL 986642 (8th Cir. 2010) http://www.ca8.uscourts.gov/opndir/10/03/083505P.pdf  which speaks to the administration of ERISA-qualified plans.

The court’s opinion remains consistent  with the prevailing law in this area.  Which is why it is so curious that the lower court erred in its application of the appropriate standard of review.  Nevertheless, this is a reminder to plan administrators and to plan sponsors to take note of the plan documents which control the administration of the plan and the communications delivered to plan participants.

This case carries particular weight because it is an Eighth Circuit case with jurisdiction over Arkansas.  It makes these points:

1. When a plan document delegates authority to a particular fiduciary to exercise discretion in making a decision, then the court can only properly review the decision under an “abuse of discretion” standard which  does not challenge the decision but determines whether the fiduciary exceed its legal authority in making the decision. 

2. If the plan is silent or the plan delegates the authority to a person different than the one who made the decision, then the court is to review the decision “de novo” and challenge the decision itself to determine whether it is correct under the facts and circumstances. 

3. The plan document always trumps the SPD, especially when the SPD says that the plan document controls.
The implications from this case for Walmart plan administration are:

1. That the person or committee making fiduciary decisions be properly delegated that discretion in the plan document.
2. That the plan documents and the SPDs are always consistent in providing that the fiduciary may make decisions in its full discretion subject to the terms of the plan and controlling law.

« BACK