In a recent decision significant both to benefit plan sponsors and administrators, and even more critical to plan participants and their beneficiaries (or would-be beneficiaries), the Ninth Circuit held that beneficiary designation forms were not plan documents under ERISA, where the forms did not provide information to participants about the plan and the plan documents did not incorporate the forms by reference.  Becker v. Williams, 2015 WL 348872 (9th Cir. 2015).

The issue arose following the death of a participant in two Xerox benefit plans (the “Xerox Plans”).  The participant initially had designated his then-wife as his beneficiary; after his divorce from her, the participant notified Xerox by telephone that he wanted to change his beneficiary under the Xerox Plans from his ex-wife to his son (from a previous marriage).  Each time, Xerox provided, but the participant did not return, forms requesting that he confirm the beneficiary designation.  Following the participant’s death, both his ex-wife and his son sought benefits under the Xerox Plans.  The Xerox Plans did not make a determination on these claims; instead, the fiduciary of the Xerox Plans interpleaded the ex-wife and son and sought judicial guidance.  The ex-wife successfully obtained summary judgment because the participant had failed to return the designation forms and thus did not properly change the beneficiary.

Reversing summary judgment, the Ninth Circuit addressed and rejected each of the ex-wife’s arguments:  first, that the designation forms constituted plan documents and had to be returned to change the designation; and, second, that the administrators of the Xerox Plans had exercised their discretion to require the forms.  With respect to the first contention, the Ninth Circuit disagreed that the designation forms constituted plan documents, finding that only documents that “provide information as to where the participant stands with respect to the plan” (citations omitted) – for example, guidance regarding plan benefits – could constitute plan documents, and that the designation forms, which provided no such information, were not plan documents.  The court further noted that the plan did not incorporate the forms by reference.  As for the second argument, the Ninth Circuit also found no exercise of discretion, given that, among other things, the Xerox Plans elected to interplead the benefit claims implicating the designation forms.

This decision provides important takeaways for plan sponsors and administrators:

  • In designing benefit plans, sponsors should decide which documents they want as plan documents, include plan information therein, and incorporate the documents by reference in the plan document – or take corresponding steps to exclude documents (such as expressly disclaiming plan document status, if that is the intent).Becker suggests that either referencing plan information, or incorporating by reference, may be sufficient, but taking both steps will help ensure treatment as a plan document.
  • With respect to the documents specifically at issue in Becker – beneficiary designation forms – sponsors should consider treating them as plan documents and requiring their use, to maximize certainty in plan administration.
  • In assessing benefit claims, administrators must make certain that they have identified the documents that constitute plan documents, and consider these documents (as well as any other relevant information, especially if the plan has not been narrowly drawn) in awarding benefits and assessing benefit claims and appeals.