SPD Wins Out Against Conflicting Plan Terms

August 20, 2007 (PLANSPONSOR.com) - The 5th U.S. Circuit Court of Appeals has ruled that a summary plan description affording an injured plant operator disability benefits trumps other plan provisions that require 10 years of service before benefit eligibility.

According to the opinion written by Circuit Judge James Dennis, a SPD saying that a worker must be employed for five years to receive disability benefits from Murphy Oil USA Inc. was the controlling document and trumped plan provisions that said a worker must have 10 years of service.

Willie Washington Jr. was a plant operator at Murphy Oil for eight years until he had to take a leave of absence for back injuries he sustained at work. He participated in a retirement plan that afforded him disability benefits, but he was told he was ineligible because he had not worked for the company for 10 years.

After being denied benefits, Washington filed suit in the U.S. District Court for the Eastern District of Louisiana, claiming that the SPD entitled him to benefits. Murphy Oil contended that after five years of service, Washington would be eligible for benefits in the future, so long as he did not fall under one of the exceptions listed in the plan. Murphy Oil contended that the 10-year service requirement was one of those exceptions.

The district court said that the SPD was the controlling document and Dennis for the appeals court concurred. Murphy Oil argued that the Employee Retirement Income Security Act (ERISA) required that Washington had to have relied on the conflicting terms of a SPD to prevail on a claim for benefits.

“[W]hen a plan administrator’s interpretation of a controlling SPD is in direct conflict with the express and clear language of the SPD, this action is also a very strong indication of arbitrary and capricious behavior,” the court said. The court also said that ERISA does not require proof that Washington relied on the SPD.

The opinion is Washington v. Murphy Oil USA Inc.,   5th Cir., No. 05-31063, 8/16/07) is here .