Court: Life Insurance Co. Not an Administrator despite SPD Claim

October 7, 2004 ( - Despite being named as an 'administrator' in a health plan's summary plan document (SPD), a life insurance company cannot be sued under the Employee Retirement Income Security Act (ERISA) for denying benefits, a federal court has ruled.

>Aetna Life Insurance, although named in the Cooper Industries Inc. SPD, cannot be sued under ERISA because it is just a third-party administrator, US District Judge Warren Eginton of the US District Court for Connecticut ruled. Eginton, instead of relying solely on the SPD, considered the master plan documents as well as the administrative services contract between Aetna and Cooper, which made it clear that the life insurance company was not an administrator under ERISA rules.

>The case, Tythcott v. Aetna Life Insurance Co., was brought by the daughter of a Cooper employee who wished to have significant birthmarks removed. Ruling that this constituted cosmetic surgery and was thus not covered by the plan, Aetna denied coverage to Britney Tythcott. Tythcott then sued the life insurance company, alleging that it had violated ERISA by denying her requests for benefits.

>Aetna argued that it could not be sued under ERISA because it was not the designated plan administrator, despite being named in the SPD. After considering the de facto relationship between Aetna and Cooper, Eginton ruled in favor of the life insurance company.

“Further, both summary plan description and the service contract provides for Aetna’s discretion to be curtailed by review and modification by Cooper Industries, which provisions are fatal to plaintiff’s argument that Aetna controlled the distribution of funds and benefit decisions,” Eginton asserted in his decision.

>The full decision of the case can be viewed at