Court: SPD Beats Plan Document Only in Language Conflict

June 17, 2003 ( - A federal judge has upheld a benefits denial by a disability plan administrator, saying that a summary plan description (SPD) trumps a plan document only when the two conflict.

>US District Judge Gerald Rosen of the US District Court for the Eastern District of Michigan ruled that the administrator acted reasonably in the benefits determination for plaintiff Karen Valeck, Washington-based legal publisher BNA reported. The administrator decided that a plan participant who could perform her occupation as an employee benefits specialist – but not with two specific employees in her department – was not totally disabled under the plan rules.

>The court rejected Valeck’s argument that because the plan document and the SPD were inconsistent in their use of the terms “job” and “occupation,” the SPD should govern. Although the SPD controls under precedent from the US 6 th Circuit Court of Appeals, this is only triggered when the SPD and plan document directly conflict, the court said. In this case, the language of the SPD is “merely ambiguous,” and should not be permitted to trump unambiguous language in the plan document.

Depression Hits

>According to the ruling, Valeck worked at Watson Wyatt & Co. as an employee benefits specialist from 1981 until 1999. In May 1999, Valeck underwent gall bladder surgery. Following her return to work, Valeck experienced episodes of depression, and stopped coming to the office as of September 7, 1999. Valeck started receiving short-term disability benefits on September 15, 1999.

After six weeks, Valeck’s physician reported to Watson Wyatt that Valeck could return to work, with restrictions, beginning November 8, 1999. As part of these restrictions, the physician said Valeck could no longer work under her current direct supervisor or with another particular employee whom she felt were harassing her. After Watson Wyatt refused to accommodate Valeck in this manner, Watson Wyatt considered whether Valeck was qualified for a disability retirement under the firm’s pension plan.

The pension plan document defined total disability as an employee who, because of injury or sickness, could not perform the material duties of his or her “regular occupation.” The summary plan description said an employee must be unable to perform his or her “regular job.” The SPD also provided that in the case of a conflict between the plan document and the SPD, the plan document governed.

The plan was administered by the retirement committee. The committee denied Valeck benefits, saying issues concerning Valeck’s job environment, not her psychiatric condition, were preventing her from returning to work.

Parties Reach a Settlement

In August 2000, Valeck and Watson Wyatt inked a settlement agreement, under which Watson Wyatt agreed to severance payments in a way that was designed to enable Valeck to qualify for early retirement under the pension plan. In return, Valeck agreed to release Watson Wyatt of all claims, except for any claims she had, or may have in the future, relating to the denial of benefits.

>In October 2000, Valeck submitted a new claim for a disability pension based on her current condition that existed since June 2000. After the committee denied this claim, Valeck filed a federal court suit. Addressing Valeck’s claim for benefits based on her 1999 condition, the court said the committee’s denial of benefits was rational and consistent with the terms of the plan.

The court said that even if the plan document did not control, the court must defer to the committee’s interpretation, since it was rational in light of the plan’s provisions. Under the committee’s interpretation, the only prohibition against Valeck continuing to work was the specific management in place in her department, not her condition. The court noted that Valeck, as an employee benefits specialist, was therefore “very familiar” with language used in Watson Wyatt’s plan and SPD.

>The case is Valeck v. Watson Wyatt & Co., E.D. Mich., No. 02-70272, 6/6/03.