Kaufmann v . Prudential Ins. Co. CV-11-119-PB 1/5/2012 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Deborah J. Kaufmann
v. Case N o . 11-cv-119-PB Opinion N o . 2012 DNH 003 Prudential Insurance Company of America
MEMORANDUM AND ORDER
A claimant in an action for benefits under the Employment
Retirement Income Security Act (“ERISA”) ordinarily must timely
exhaust administrative remedies before commencing an action in
this court. The question presented by the defendant’s motion
for summary judgment is whether such a claimant must comply with
an administrative appeal procedure that is included in an ERISA
plan’s Summary Plan Description (“SPD”) but not in the written
instrument that establishes the plan.
I. BACKGROUND
A. Kaufmann’s Claim
Deborah J. Kaufmann was employed as an administrative
assistant at Goss International Americas Inc. (“Goss”) until
March 7 , 2005, when she stopped working due to back and neck pain. Goss provides its employees with both Short Term
Disability (“STD”) and Long Term Disability (“LTD”) benefits
under a welfare plan governed by ERISA and insured by the
Prudential Insurance Company of America (the “Plan”). Kaufmann
applied for and was awarded STD benefits based on her inability
to perform her duties as an administrative assistant. After she
reached her maximum STD benefits in August 2005, Kaufmann began
to receive LTD benefits. She continued to receive LTD benefits
for approximately seven months.
On February 2 3 , 2006, Prudential informed Kaufmann that it
was terminating her LTD benefits effective April 1 , 2006,
because it determined that she was no longer disabled. D.’s Ex.
4 at D0898, Doc. N o . 49-2. The letter informed Kaufmann of her
right to appeal the unfavorable decision and that the appeal
“must be submitted within 180 days of the date of your receipt
of this letter.” Id. at D0899. The letter also provided the
address where the written appeal should be submitted and the
information to be included in the appeal. Id.
On August 2 1 , 2006, Kaufmann’s attorney wrote a letter to
Prudential requesting a number of documents and indicating that
an appeal would be forthcoming. D.’s Ex. 9 at D0083, Doc. N o .
2 49-2. Kaufmann, however, did not submit the appeal until
February 1 7 , 2009, approximately two-and-a-half years after the
appeal deadline had passed. D.’s Ex. 12 at D0096, Doc. N o . 49-
2. The next day, she commenced this action.1 On February 2 6 ,
2009, Prudential informed Kaufmann that it would not consider
her appeal because it was untimely. D.’s Ex. 13 at D0890-91,
Doc. N o . 49-2.
B. Plan Documents
The documents that establish the Plan do not require that a
claimant exhaust administrative appeals before proceeding with a
claim for benefits in court. Instead, they state that “[y]ou
can start legal action regarding your claim 60 days after proof
of claim has been given and up to 3 years from the time proof of
claim is required, unless otherwise provided under federal law.”
D.’s Ex. 1 at D0463, Doc. N o . 49-3.
The SPD for the Plan states at the outset: “The Summary
Plan Description is not part of the Group Insurance Certificate.
1 Kaufmann sued Prudential rather than Goss even though the SPD identifies Goss as the Plan administrator. Prudential does not argue that it is not a proper defendant and, in any event, it appears that it was the correct party to sue because the Plan documents establish that Prudential “is the party that controls administration of the plan.” Terry v . Bayer Corp., 145 F.3d 2 8 , 36 (1st Cir. 1998). 3 It has been provided by your Employer and included in your
Booklet-Certificate upon the Employer’s request.” Id. at D0470.
The SPD also establishes procedures that claimants must follow
to appeal adverse determinations. The relevant language
provides that “[i]f your claim for benefits is denied . . . , you
or your representative may appeal your denied claim in writing
to Prudential within 180 days of the receipt of the written
notice of denial . . . .” Id. at D0473. If the appeal is
denied, the claimant may submit “a second, voluntary appeal of
[the] denial” or may “elect to initiate a lawsuit without
submitting to a second level of appeal.” Id. at D0474. “If
[the claimant] elect[s] to initiate a lawsuit without submitting
to a second level of appeal, the plan waives any right to assert
that [she] failed to exhaust administrative remedies.” Id.
II. STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals “no
genuine dispute as to any material fact and that the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The evidence submitted in support of the motion must be
considered in the light most favorable to the nonmoving party,
4 drawing all reasonable inferences in its favor. See Navarro v .
Pfizer Corp., 261 F.3d 9 0 , 94 (1st Cir. 2001).
A party seeking summary judgment must first identify the
absence of any genuine issue of material fact. Celotex Corp. v .
Catrett, 477 U.S. 3 1 7 , 323 (1986). The burden then shifts to
the nonmoving party to “produce evidence on which a reasonable
finder of fact, under the appropriate proof burden, could base a
verdict for i t ; if that party cannot produce such evidence, the
motion must be granted.” Ayala-Gerena v . Bristol Myers-Squibb
Co., 95 F.3d 8 6 , 94 (1st Cir. 1996); see Celotex, 477 U.S. at
323.
III. ANALYSIS
Prudential bases its motion for summary judgment on the
undisputed fact that Kaufmann failed to comply with the 180-day
administrative appeal period established by the SPD. Kaufmann
responds by claiming that the administrative appeal period is
unenforceable because it was never properly made a part of the
plan. I agree with Kaufmann.
Every ERISA plan must be “established and maintained
pursuant to a written instrument.” 29 U.S.C. § 1102(a)(1). A
5 key congressional report explains the purpose of this
requirement: “A written plan is to be required in order that
every employee may, on examining the plan documents, determine
exactly what his rights and obligations are under the plan.”
Curtiss-Wright Corp. v . Schoonejongen, 514 U.S. 7 3 , 83 (1995)
(quoting H.R. Rep. N o . 93-1280, at 297 (1974), reprinted in 1974
U.S.C.C.A.N. 4639, 5077-78); see also Fenton v . John Hancock
Mut. Life Ins. Co., 400 F.3d 8 3 , 88-89 (1st Cir. 2005) (“The
purpose of [the written instrument] requirement is to ensure
that participants know their rights and obligations under the
plan, and to provide some degree of certainty in the
administration of benefits.”) (internal citations omitted).
The written instrument constituting the plan must contain
“the basic terms and conditions of the plan.” CIGNA Corp. v .
Amara, 131 S . C t . 1866, 1877 (2011) (citing 29 U.S.C. § 1102).
As the statutory scheme makes plain, the requisite terms include
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Kaufmann v . Prudential Ins. Co. CV-11-119-PB 1/5/2012 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Deborah J. Kaufmann
v. Case N o . 11-cv-119-PB Opinion N o . 2012 DNH 003 Prudential Insurance Company of America
MEMORANDUM AND ORDER
A claimant in an action for benefits under the Employment
Retirement Income Security Act (“ERISA”) ordinarily must timely
exhaust administrative remedies before commencing an action in
this court. The question presented by the defendant’s motion
for summary judgment is whether such a claimant must comply with
an administrative appeal procedure that is included in an ERISA
plan’s Summary Plan Description (“SPD”) but not in the written
instrument that establishes the plan.
I. BACKGROUND
A. Kaufmann’s Claim
Deborah J. Kaufmann was employed as an administrative
assistant at Goss International Americas Inc. (“Goss”) until
March 7 , 2005, when she stopped working due to back and neck pain. Goss provides its employees with both Short Term
Disability (“STD”) and Long Term Disability (“LTD”) benefits
under a welfare plan governed by ERISA and insured by the
Prudential Insurance Company of America (the “Plan”). Kaufmann
applied for and was awarded STD benefits based on her inability
to perform her duties as an administrative assistant. After she
reached her maximum STD benefits in August 2005, Kaufmann began
to receive LTD benefits. She continued to receive LTD benefits
for approximately seven months.
On February 2 3 , 2006, Prudential informed Kaufmann that it
was terminating her LTD benefits effective April 1 , 2006,
because it determined that she was no longer disabled. D.’s Ex.
4 at D0898, Doc. N o . 49-2. The letter informed Kaufmann of her
right to appeal the unfavorable decision and that the appeal
“must be submitted within 180 days of the date of your receipt
of this letter.” Id. at D0899. The letter also provided the
address where the written appeal should be submitted and the
information to be included in the appeal. Id.
On August 2 1 , 2006, Kaufmann’s attorney wrote a letter to
Prudential requesting a number of documents and indicating that
an appeal would be forthcoming. D.’s Ex. 9 at D0083, Doc. N o .
2 49-2. Kaufmann, however, did not submit the appeal until
February 1 7 , 2009, approximately two-and-a-half years after the
appeal deadline had passed. D.’s Ex. 12 at D0096, Doc. N o . 49-
2. The next day, she commenced this action.1 On February 2 6 ,
2009, Prudential informed Kaufmann that it would not consider
her appeal because it was untimely. D.’s Ex. 13 at D0890-91,
Doc. N o . 49-2.
B. Plan Documents
The documents that establish the Plan do not require that a
claimant exhaust administrative appeals before proceeding with a
claim for benefits in court. Instead, they state that “[y]ou
can start legal action regarding your claim 60 days after proof
of claim has been given and up to 3 years from the time proof of
claim is required, unless otherwise provided under federal law.”
D.’s Ex. 1 at D0463, Doc. N o . 49-3.
The SPD for the Plan states at the outset: “The Summary
Plan Description is not part of the Group Insurance Certificate.
1 Kaufmann sued Prudential rather than Goss even though the SPD identifies Goss as the Plan administrator. Prudential does not argue that it is not a proper defendant and, in any event, it appears that it was the correct party to sue because the Plan documents establish that Prudential “is the party that controls administration of the plan.” Terry v . Bayer Corp., 145 F.3d 2 8 , 36 (1st Cir. 1998). 3 It has been provided by your Employer and included in your
Booklet-Certificate upon the Employer’s request.” Id. at D0470.
The SPD also establishes procedures that claimants must follow
to appeal adverse determinations. The relevant language
provides that “[i]f your claim for benefits is denied . . . , you
or your representative may appeal your denied claim in writing
to Prudential within 180 days of the receipt of the written
notice of denial . . . .” Id. at D0473. If the appeal is
denied, the claimant may submit “a second, voluntary appeal of
[the] denial” or may “elect to initiate a lawsuit without
submitting to a second level of appeal.” Id. at D0474. “If
[the claimant] elect[s] to initiate a lawsuit without submitting
to a second level of appeal, the plan waives any right to assert
that [she] failed to exhaust administrative remedies.” Id.
II. STANDARD OF REVIEW
Summary judgment is appropriate when the record reveals “no
genuine dispute as to any material fact and that the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The evidence submitted in support of the motion must be
considered in the light most favorable to the nonmoving party,
4 drawing all reasonable inferences in its favor. See Navarro v .
Pfizer Corp., 261 F.3d 9 0 , 94 (1st Cir. 2001).
A party seeking summary judgment must first identify the
absence of any genuine issue of material fact. Celotex Corp. v .
Catrett, 477 U.S. 3 1 7 , 323 (1986). The burden then shifts to
the nonmoving party to “produce evidence on which a reasonable
finder of fact, under the appropriate proof burden, could base a
verdict for i t ; if that party cannot produce such evidence, the
motion must be granted.” Ayala-Gerena v . Bristol Myers-Squibb
Co., 95 F.3d 8 6 , 94 (1st Cir. 1996); see Celotex, 477 U.S. at
323.
III. ANALYSIS
Prudential bases its motion for summary judgment on the
undisputed fact that Kaufmann failed to comply with the 180-day
administrative appeal period established by the SPD. Kaufmann
responds by claiming that the administrative appeal period is
unenforceable because it was never properly made a part of the
plan. I agree with Kaufmann.
Every ERISA plan must be “established and maintained
pursuant to a written instrument.” 29 U.S.C. § 1102(a)(1). A
5 key congressional report explains the purpose of this
requirement: “A written plan is to be required in order that
every employee may, on examining the plan documents, determine
exactly what his rights and obligations are under the plan.”
Curtiss-Wright Corp. v . Schoonejongen, 514 U.S. 7 3 , 83 (1995)
(quoting H.R. Rep. N o . 93-1280, at 297 (1974), reprinted in 1974
U.S.C.C.A.N. 4639, 5077-78); see also Fenton v . John Hancock
Mut. Life Ins. Co., 400 F.3d 8 3 , 88-89 (1st Cir. 2005) (“The
purpose of [the written instrument] requirement is to ensure
that participants know their rights and obligations under the
plan, and to provide some degree of certainty in the
administration of benefits.”) (internal citations omitted).
The written instrument constituting the plan must contain
“the basic terms and conditions of the plan.” CIGNA Corp. v .
Amara, 131 S . C t . 1866, 1877 (2011) (citing 29 U.S.C. § 1102).
As the statutory scheme makes plain, the requisite terms include
procedures for appealing a denial or termination of benefits.
Section 1133 provides, in pertinent part:
In accordance with regulations of the Secretary [of Labor], every employee benefit plan shall— (2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
6 29 U.S.C. § 1133. Pursuant to the Secretary’s regulation,
“every [ ] plan shall establish and maintain reasonable
procedures governing the . . . appeal of adverse benefit
determinations . . . .” 29 C.F.R. § 2560.503-1(b). Here,
however, the written instrument constituting the Plan does not
establish any procedures for appealing adverse decisions that
must be exhausted before a lawsuit may be filed. Instead, it
clearly states that a lawsuit may be filed challenging a denial
of benefits “60 days after proof of claim has been given and up
to 3 years from the time proof of claim is required, unless
otherwise provided under federal law.” D.’s Ex. 1 at D0463,
Doc. N o . 49-3.
Prudential acknowledges that the SPD is the only plan
document that contains appeal procedures. Prudential maintains,
however, that the appeal provisions in the SPD constitute the
terms of the Plan. This position is untenable for a number of
reasons. First, the SPD expressly declares that its provisions
are not part of the Plan. See id. at D0470. Second, the
Supreme Court in Amara expressly rejected the argument that “the
terms of the [SPD] are terms of the plan.” 131 S . C t . at 1877.
After examining the relevant statutory provisions, the Court 7 concluded that “the summary documents, important as they are,
provide communication with beneficiaries about the plan, but
that their statements do not themselves constitute the terms of
the plan . . . .” Id. at 1878 (emphasis in original).
By including the appeal procedures only in the SPD, the
Plan administrator here effectively sought to amend the written
instrument constituting the Plan without following the Plan’s
procedure for making amendments. It had no authority to do s o .
See id. at 1877. As Justice Breyer remarked in Amara, ERISA
does not give plan administrators “the power to set plan terms
indirectly by including them in the summary plan descriptions.”
Id. Only the plan sponsor can set the terms of the plan and it
must do so in the written instrument establishing the plan. Id.
Although here the same entity is listed as both the Plan sponsor
and the Plan administrator, as was the case in Amara, the
Supreme Court has made it clear that ERISA preserves the
distinction between the two roles. See id. The SPD, which the
Plan administrator is responsible for distributing to
participants, therefore, cannot graft onto the Plan procedures
that must be in the written instrument constituting the Plan.
Here, the SPD purports to add terms establishing administrative
8 appeal procedures. Because the written instrument constituting
the Plan does not require that administrative appeals be pursued
before a lawsuit is filed, those SPD provisions are ineffective.
Prudential’s argument that it was required to place the
appeal procedures in the SPD and, therefore, did not have to
include them in the written instrument constituting the Plan, is
unpersuasive. The regulation governing claim procedures does
provide that to be “reasonable,” a “description of all claims
procedures . . . and the applicable time frames” must be
“included as part of a summary plan description . . . .” 29
C.F.R. § 2560.503-1(b)(2). Requiring inclusion of claims
procedures in the SPD, however, does not mean that they need not
be in the written instrument establishing the Plan. Rather,
inclusion of the procedures in the SPD is an additional
disclosure requirement, designed to communicate to plan
participants information about their appeal rights and
procedures established in the written instrument constituting
the Plan.
More importantly, ERISA requires the SPD to include “the
remedies available under the plan for the redress of claims
which are denied in whole or in part . . . .” 29 U.S.C. §
9 1022(b). The Court in Amara interpreted a similar provision and
concluded that “[t]he syntax of that provision, requiring that
participants and beneficiaries be advised of their rights and
obligations ‘under the plan,’ suggests that the information
about the plan provided by [the SPD] is not itself part of the
plan.” See 131 S . C t . at 1877 (emphasis in original). The SPD,
therefore, cannot establish appeal procedures that are not
included in the written instrument constituting the Plan.
Other courts that have analyzed provisions included in the
SPD but not in the written instrument constituting the plan have
come to similar conclusions. See, e.g., Merigan v . Liberty Life
Assurance C o . of Boston, N o . 2009–11087–RBC, 2011 WL 5974455, at
*7 (D. Mass. Nov. 3 0 , 2011) (concluding that an appeal deadline
contained in the SPD but not in the written instrument
constituting the plan is unenforceable under Amara); Shoop v .
Life Ins. C o . of N . Am., N o . 4:10CV125, 2011 WL 3665030, at *5
(E.D. V a . July 1 9 , 2011) (“[E]ven though the SPD states that
[defendant] has sole discretion to interpret the terms of the
Policy, the fact that this language is not included in the
Policy itself, means [that the defendant’s] administrative
interpretation of the Policy terms is due no deference.”); Spain
10 v . Prudential Ins. C o . of Am., N o . 09-cv-608 JPG, 2010 WL
669866, at *6 (S.D. Ill. Feb. 2 2 , 2010) (“[T]he SPD cannot add a
mandatory administrative appeal process to the Plan where the
Plan is silent and then argue that [plaintiff] failed to exhaust
those administrative remedies.”); see also Schwartz v .
Prudential Ins. C o . of Am., 450 F.3d 6 9 7 , 698-99 (7th Cir. 2006)
(defendant could not rely upon language in the SPD granting it
discretionary decision-making authority “which the plan itself
does not confer”). But see Tetreault v . Reliance Standard Life
Ins. Co., N o . 10-11420-JLT (D. Mass. Nov. 2 8 , 2011) (a pending
Report and Recommendation advising the district judge to whom
the case is assigned to grant defendants’ motion for summary
judgment because plaintiff failed to comply with the 180-day
appeal deadline contained only in the S P D ) .
Although here the SPD states that the Plan’s participants
have 180 days to appeal a denial or termination of benefits, the
fact that this language is not included in the written
instrument constituting the Plan renders the appeal deadline
unenforceable. The SPD cannot add a mandatory appeal procedure
when the Plan is silent on the subject. Therefore, Kaufmann did
not fail to exhaust the Plan’s administrative remedies by
11 appealing the termination of her LTD benefits after the 180-day
deadline had expired.2
IV. CONCLUSION
For the reasons provided above, I deny Prudential’s motion
for summary judgment (Doc. N o . 4 9 ) .
SO ORDERED.
/ s / Paul Barbadoro Paul Barbadoro United States District Judge
January 5 , 2011
cc: Jonathan M . Feigenbaum Joseph C . Galanes Patrick C . DiCarlo Byrne J. Decker
2 Prudential briefly argues that the appeal provisions in the SPD are enforceable even if they are not established in the written instrument constituting the Plan because Kaufmann cannot show “significant reliance” and “prejudice” to be exempt from the SPD’s requirements. The cases Prudential cites, however, merely recognize that a claimant cannot base a claim on language in an SPD that differs from the underlying plan without proof of reliance on the SPD. See Bachelder v . Commc’ns Satellite Corp., 837 F.2d 519, 523 (1st Cir. 1988); see also Morales-Alejandro v . Med. Card Sys., Inc., 486 F.3d 693, 699 (1st Cir. 2007). They simply do not support the very different proposition that a claimant cannot rely on language in a plan that differs from the SPD without proof of reliance on the plan. 12