The three-judge panel threw out claims by the beneficiary of a life insurance policy that she was owed more benefits based on the calculations used for a benefits worksheet rather than calculations based on the summary of material modifications.
According to the opinion written by Judge Jeffrey Sutton, the enrollment worksheet did not qualify as a legitimate summary of changes to the plan, but instead provided only a “personalized” estimate of benefits – an estimate that the company warned should be reviewed for accuracy. The court called the enrollment worksheet “nothing more than an informal communication between the administrator and one employee.”
Billy Allred, a production manager at Rohm & Haas Co’s Louisville, Kentucky facility, became eligible for participation in the company’s health and welfare plan for salaried employees. Under the plan, he would get a basic life insurance benefit of $10,000 plus three times his annual salary, and also had the option of purchasing supplemental life insurance, in 25% increments, up to three times his base salary. Allred purchased supplemental insurance of 175% of his base salary.
Rohm & Haas changed its life insurance benefits in the fall of 2000, and mailed a booklet to employees to explain the material modifications to the life insurance coverage. The change decreased the basic life insurance benefit to two times the employee’s salary, increased the maximum supplemental coverage to six times their salary in 100% increments and got rid of the $10,000 basic life insurance benefit for active employees.
The booklet told employees they did not need to re-enroll if they wanted to keep the same supplemental coverage they had before, as long as it was in 100% increments.
Allred received a letter from Rohm & Haas to confirm his coverage, and used the new formula set by the booklet, confirming that he had a primary life insurance benefit equal to twice his base salary and a supplemental insurance benefit of 100% of his base salary – an amount less than that listed on his original enrollment worksheet. That amount was paid to Amanda Crosby, Allred’s beneficiary, in December 2001 after his death.Crosby then filed a suit in federal court under the Employee Retirement Income Security Act (ERISA), contending that she should have received $289,000, according to the estimates on Allred’s enrollment worksheet, not the $192,000 afforded to her by the plan documents.
The U.S. District Court for the Western District of Kentucky granted summary judgment in favor of Rohm & Haas, finding that the company had correctly amended the plan and that the booklet provided to employees describing the amendment overrode the terms of Allred’s individualized enrollment worksheet. The 6 th Circuit affirmed that decision.
Crosby asked to recover benefits allegedly owed to her as a beneficiary of her father’s life insurance policy with the company, as well as monetary penalties from Rohm & Hass for its alleged breach of the Employee Retirement Income Security Act (ERISA).
The circuit court rejected Crosby’s contention that she didn’t receive the benefits that were due to her under then plan because the booklet was not a legitimate summary of the changes to the plan, and her argument that the enrollment worksheet effectively amended the terms of the booklet.
The court ruled that the booklet distributed by Rohm and Haas in the fall of 2000 had “all the hallmarks of a legitimate summary of material modifications,” and accurately described the amendments to the plan.
The opinion in Crosby v. Rohm & Haas Co. is here .