A participant exceeded the lifetime maximum limit on benefits under a retiree health plan and then sued the employer and third party administrator for failure to adequately disclose the lifetime limit. The employer maintained an active employee health plan and a retiree health plan. However, the employer only used one summary plan description (“SPD”) for both plans. The SPD consisted of the 2006 SPD and a series of summaries of material modifications (“SMMs”) describing amendments to the plans since 2006. A 2010 SMM applied to the active employee plan and the retiree health plan. It stated that items marked with an asterisk did not apply to retirees. A heading labeled “Health Care Reform*” contained an asterisk, but the layout of the SMM did not make it clear which of the subsequently described changes, including the removal of the lifetime limit, fell under this Health Care Reform heading and thus did not apply to retirees. In addition, the court suggested that the use of a series of SMMs, which would require a participant to read the SPD and all subsequent SMMs to determine any plan provision, without any table of contents or cross-references, was not “written in a manner calculated to be understood by the average participant” as required by ERISA. The court also noted that ERISA requires an updated SPD to be issued every five years “which integrates all plan amendments made within such five-year period”, and the record suggested the employer did not comply with this requirement. The court concluded that the SPD, as amended by the 2010 SMM, violated ERISA’s statutory and regulatory disclosure requirements. As a result, the district court erred by granting summary judgment to the defendants on the breach of ERISA fiduciary duty claims and remanded the case back to the district court. This case serves as a useful warning to other employers that there can be significant financial repercussions arising from a breach of ERISA’s SPD/SMM disclosure requirements, particularly those which result in tangible harm to a participant.

King v. Blue Cross and Blue Shield of Ill., No. 15-55880 (9th Cir. Sept. 8, 2017) is available here.