In Koehler v. AETNA Health Inc., the U.S. Court of Appeals for the Fifth Circuit held that Aetna’s benefits decision was not, as a matter of law, entitled to deference where the same document, Aetna’s certificate of coverage, served as both the plan document and summary plan description (SPD).

In Koehler, Aetna refused to reimburse a participant for care she received from a specialist who was not in the plan’s participating provider network. Exercising its right to construe the plan, a right conferred upon Aetna under the terms of the certificate, Aetna determined that the certificate required preauthorization of out-of-network claims, and because the participant had not obtained preauthorization, Aetna denied the claim.

Shortly thereafter, the participant filed suit in federal district court. The court ruled against the participant, finding that Aetna did not abuse its discretion in construing the terms of the plan. The participant appealed. On appeal, the Fifth Circuit ruled that the need for pre-authorization was not clearly stated in the certificate; that Aetna’s interpretation of the ambiguous preauthorization provision was legally incorrect; and that the failure to clearly state the plan’s preauthorization rules was a violation of the legal standards that apply to SPDs. The Fifth Circuit ruled that where an SPD and plan document are identical, ambiguities in the document will be resolved in favor of participants and beneficiaries, even if the document gives the administrator the discretion to resolve ambiguities in the plan language.

As this case illustrates, the standards that apply to the interpretation of a plan may differ depending on how a plan is documented. Where the plan document and SPD are separate and distinct documents, the plan administrator is likely to be afforded greater latitude in construing the terms of the plan. This case also illuminates one of the most important standards impacting the content of SPDs, which is that SPDs must completely and accurately document the circumstances under which benefits can be lost or forfeited. (Koehler v. AETNA Health Inc., 5th Cir. May 2012)