Court: SPD Must Include Domestic Partner Affidavit Requirement

July 21, 2003 ( - A retirement plan's summary plan description (SPD) violated ERISA disclosure requirements when it failed to divulge the need to file an affidavit for domestic partners to receive preretirement survivor income benefits.

>The US 2nd Circuit Court of Appeals found the SPD’s failure to specifically include the requirement in a section pertaining to survivor benefits violated ERISA.   This comes even though the employer distributed to employees a handbook and SPD that had 16 references to the domestic partner affidavit requirement, according to Washington-based legal publisher BNA.

>In reversing a lower court’s opinion, the appeals court found a widow of a participant need not prove a detrimental reliance on the SPD’s omission of the domestic partner affidavit requirement, only that she was “prejudiced’ by the omission.     Additionally, the court rejected the plan’s argument that the widow’s claim for benefits as the participant’s domestic partner was mooted by the fact that she had married the participant six months before he died.

“If, as the Plan Administrators argue, marriage ‘moots’ domestic partnership status, the plan’s requirement means that domestic partners face a year of non-coverage if they decide to get married. This result cannot be condoned,” Circuit Judge Joseph McLaughlin said in writing for the three-judge appellate panel.

Affidavit Requirement

>Sally Burke began living with Kenneth Burke in 1991. In March 1999, Kenneth was diagnosed with lung cancer and he and Sally married in May 1999. Kenneth died in November 1999.

>After Kenneth’s death, Sally applied for preretirement survivor income benefits from Kenneth’s employer, Eastman Kodak. The company’s retirement income plan administrator denied Sally’s request for benefits, because Sally had not been married to Kenneth for at least one year, and thus was not entitled to benefits.

>Further, the plan’s administrator determined Sally was not entitled to benefits as Kenneth’s domestic partner because, although she met the requirements of a domestic partner, she and Kenneth had failed to file a domestic partnership affidavit with the administrator, as required by the plan.

Sally sued the plan and the plan administrator, alleging that the denial violated ERISA. Ruling for the plan and dismissing Sally’s lawsuit, a federal judge in the US District Court for the Western District of New York found that Sally was not entitled to preretirement survivor benefits as Kenneth’s wife because the plan clearly required that she be married to Kenneth for at least one year. Likewise, the district court found that Sally was not entitled to benefits as Kenneth’s domestic partner because the plan clearly required that an affidavit of domestic partnership be signed by both Kenneth and Sally and that the affidavit be filed with Kodak.

Appeals Reversal

>Reversing the district court’s judgment, the appeals court rejected the plan administrator’s contention that Sally’s lawsuit was prohibited because she failed to exhaust the plan’s administrative remedies before she filed the lawsuit. According to the court, when Kodak initially denied Sally’s claim for benefits, it sent her a letter cross-referencing a page in Kodak’s handbook that pertained to appeal rights. The cross-reference to the handbook stated that an aggrieved beneficiary “should” appeal a denial “within 90 days.” Sally waited five months to file an appeal, the court noted.

>Kodak’s use of the word “should” was insufficient to give Sally notice that she was required to file the appeal within 90 days, the appeals court determined. “The Kodak handbook’s use of the word ‘should’ is grossly uninformative,” the appeals court said, adding that it refused to equate the word “should” with “shall” or “must.”

In addition, the appeals court rejected Kodak’s assertion that Sally’s claim for domestic partner survivor benefits was mooted by the fact that she had married Kenneth. Neither the SPD nor the plan’s section on survivor benefits “provides that once an otherwise eligible domestic partner marries, the couple forfeits any claim to benefits as domestic partners if the plan participant dies less than a year later,” the appeals court said.

The case is Burke v. Kodak Retirement Income Plan,   2d Cir., No. 02-9051, 7/17/03.