Late Distribution of SPD Not Reason for Employee Ignorance

February 15, 2006 ( - The US District Court for the Eastern District of New York has ruled that a participant cannot recover long-term disability benefits even though she did not receive the plan's summary plan description (SPD) in a timely manner.

BNA reports that the failure to distribute the SPD was a “harmless” error since the employee received annual benefit statements that included information about the long-term disability plan.   Because she received this annual notice, the court said it would be “unfair” to hold the employer responsible for the employee’s claim of ignorance, even though the Employee Retirement Income Security Act (ERISA) requires employers to provide notice of the plan’s existence.

Stephanie Exarhakis attended an orientation session that informed her of the benefit plans offered when she was hired by Visiting Nurse Service of New York (VNS).   She claimed that no one mentioned the long-term disability plan during the sessions.   According to the court, she was not given an SPD for the plan until 2001.

In 1998 she was injured when she was hit by a truck.   She attempted to work a schedule that accommodated her disabilities.   In October of 2001, she applied for benefits under the long-term disability plan.   Her claim was denied because she had 30 days from the onset of her disability to apply for benefits.

Exarhakis filed a lawsuit against VNS claiming it violated ERISA by not adequately informing her of VNS’s disability benefit plan. Exarhakis also sued First UNUM, the plan’s administrator saying it acted arbitrarily and capriciously by denying her claim for benefits.

The court granted summary judgment in favor of VNS and First UNUM, noting that even if Exarhakis’s alleged unawareness of the plan until VNS’s 2001 distribution of the SPD caused her to miss the plan’s 30-day deadline for filing claims for benefits, her claim for benefits would still have been denied since, after she received the SPD, she filed her claim 50 days later.

The case is Exarhakis v. Visiting Nurse Service of New York, E.D.N.Y., No. 02-CV-5562 (ILG), 2/13/06.