By: Ian Morrison
Sometimes in life, it’s OK to dismiss proper documentation as unimportant. But seldom if you are an ERISA lawyer or benefits professional.
Estoppel claims and other attempts to get equitable remedies are rampant in the wake of the Supreme Court’s Amara decision [discussed in our posts here, and here ]. These claims frequently depend on oral communications with benefit plan staff or allegedly vague or misleading documents.
Recent court decisions show that the best defenses to these claims are clear “official” plan disclosures. For example, in Jenkins v. Union Labor Life Co., (No. 12-4310, 3d. Cir. Sept. 16, 2013), the Third Circuit court of appeals rejected claims for additional benefits based upon a question and answer format “benefits overview.” That document allegedly suggested that a group of employees might become eligible for a defined benefit pension by discussing pension plan eligibility and vesting rules. However, the participants later received copies of collective bargaining agreements that made clear there was no defined benefit plan at the time, only a defined contribution plan.
Based upon the plaintiffs’ receipt of documents making clear they weren’t in the defined benefit plan, the court found lacking one of the elements of estoppel — “reasonable detrimental reliance” — because subsequent communications made clear that the requested benefits were not available to these particular employees.
Similarly, in Haviland v. Metro. Life Ins. Co., No. 12-1958 (6th Cir. September 12, 2013), the Court rejected a claim for lifetime life insurance benefits. The claim was premised on periodic statements to a class of retirees that their then-current benefits would continue “during their lifetimes.” The court rejected this claim because the governing plan documents unambiguously stated that the benefits could be changed or terminated at any time. Thus, the references to lifetime benefits were at best statements of current intention.
In short, the best defense to an ERISA estoppel claim often lies in clear plan documents and communications. Well drafted documents, distributed to participants at the right time, can undercut claims of reasonable reliance upon other inaccurate statements about benefits. ERISA plan administrators should focus on the clarity and accuracy of formal ERISA plan disclosures, not just to ensure compliance with technical requirements but also as a way to avoid unintended liabilities and defeat future estoppel claims.
In short, if you are sued under ERISA for estoppel, clear plan disclosures are worth their weight in gold.