Sixth Circuit: SPD is Binding Plan Document, Subrogation Clause Enforceable

The central question in this appeal before the Sixth Circuit was whether the summary plan description (SPD) — the only document in the record that contained a subrogation provision — was a binding plan document with enforceable terms.

In this case, Bd. of Trs. v. Moore, U.S. Ct. Apps., Sixth Cir., Aug. 25, 2015, there was a Trust Agreement that authorized the Board of Trustees to adopt a written welfare benefits plan, to administer the plan, and to act as plan fiduciary. Central to the Trust Agreement was the authority of the trustees to “adopt a Plan of Welfare Benefits, which sets forth eligibility requirements, type, amount, and duration of benefits that are to be provided to eligible employees.” Here, the Board did not draft a welfare benefits plan and instead drafted only a SPD, explaining what benefits are provided under the welfare benefits plan and how to go about filing a claim for them.

The Plan argued that the SPD also constituted the Plan as called for in the Trust Agreement. The underlying insured argued that the Trust Agreement was the controlling Plan and because it did not contain a subrogation provision, it was not enforceable against the proceeds of his settlement in the underlying state-court negligence action. In support of his argument, the insured cited to Amara which stated that “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.” CIGNA Corp. v. Amara, 563 U.S. 421, 131 S. Ct. 1866, 1878 (2011).

The Sixth Circuit distinguished the facts in Amara, stating that in that case it was clear that one document functioned as the plan itself, and that a different document functioned as the SPD, and that the two documents contained conflicting terms. Citing to the Tenth and First Circuits, the Sixth Circuit held that “[n]othing in Amara prevents a document from functioning both as the ERISA plan and as an SPD, if the terms of the plan so provide.” See Eugene S. v. Horizon Blue Cross Blue Shield of N.J., 663 F.3d 1124, 1131 (10th Cir. 2011) (“An SPD can be part of the Plan.”); Tetreault v. Reliance Standard Life Ins. Co., 769 F.3d 49, 56 (1st Cir. 2014) (holding that an SPD creates enforceable rights and duties when a plan document expressly incorporates the SPD).

In reaching its holding, the Sixth Circuit affirmed the district court’s reliance on Feifer v. Prudential Ins. Co. of America, 306 F.3d 1202, 1209 (2nd Cir. 2002), concluding that “[t]he summary plan description in the record is the controlling document because there is no other plan document that establishes Moore’s right to receive medical benefits and the Plan’s subrogation rights. The document establishing the Plan’s trust is not the applicable “plan document” because it does not describe “the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.” “Because the district court correctly concluded that the [SPD] containing the subrogation provision set out the binding terms of the Plan and that the plain language of the provision required reimbursement, we affirm.”

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