Compliance February 7, 2004

SPD Practices Trumps Worker Memory

July 26, 2002 (PLANSPONSOR.com) - Evidence that an employer routinely provided each new worker with a summary plan description (SPD) was enough to overcome a worker's claim that she never received the information - and was thus unaware of the claims filing deadline.

Reported by

Nevin E. Adams

Phyllis Hunter worked for Lockheed Martin Corp. from December 1978 until she was laid off on Jan. 8, 1993.

In August 1998, she filed an application for benefits from Lockheed’s disability retirement benefit plan. Lockheed denied the application as untimely, noting that Hunter had two years from the date she was laid off to file a claim for benefits under the plan.

Claim Arguments

Hunter brought a lawsuit alleging that the limitation didn’t apply to her, since she had never received the SPD. She also said her medical condition caused her to miss the filing deadline and thus, the timing of her claim should be extended (“equitably tolled”) and alternatively, even if she did receive the SPD, that document was inadequate since it did not describe the circumstances that would result in an extension of the filing period.

Despite the testimony of several other workers that claimed they never received an SPD, the court cited “substantial” evidence that Lockheed demonstrated a practice of providing each employee – as they were hired – a copy of the SPD. In the court’s words, the practices were “reasonably calculated to ensure actual receipt” of the SPD.

Alternative Arguments

As for Hunter’s second argument, District Judge Ronald M. Whyte also found that the employer did not violate the Employee Retirement Income Security Act (ERISA) by failing to describe in its disability retirement benefit plan the circumstances under which a benefit claim’s filing period would be equitably tolled. “[T]he court is unaware of any case suggesting an ERISA plan must explain equitable tolling,” the court said, according to BNA.

Finally, the court held that equitable tolling due to a medical condition was only available under exceptional circumstances, “such as institutionalization or adjudged mental incompetence.” However, the court noted that in the present case, “[a]lthough Ms. Hunter was suffering from a variety of medical conditions, she was far from institutionalized or mentally incompetent.”

The case is Hunter v. Lockheed Martin Corp., N.D. Calif., No. C-99-20996 RMW, 6/7/02.