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The Supreme Court has held that the contents of a summary plan description (SPD) do not constitute the terms of a Plan; instead the Plan document itself is the final authority while the SPD merely acts as a summary. At first glance, this seems to imply that a participant does not have any recourse to enforce terms in the SPD that conflict with the Plan document.
However, the Sixth Circuit has recently clarified that participants do have a legal claim when they rely on terms in the SPD that conflict with terms in the Plan. While participants cannot sue to enforce the terms of the Plan, they can sue for equitable relief under ERISA.
In this case, a participant declined a buyout offer and instead was terminated by his employer Chrysler. He then applied for early retirement benefits, relying on an SPD provision that stated he did not need to be actively employed to be eligible for these benefits. However, the SPD omitted a provision that was in the Plan document, which clarified that terminated employees were not eligible for these benefits. The participant sued after his administrative appeal for benefits was denied. After reviewing the district court decision, the Sixth Circuit held that Mr. Pearce reasonably relied on the terms in the SPD and was therefore entitled to equitable estoppel, a legal doctrine that prevents a Plan from making an assertion and then later going back on its word.
This case serves as a reminder that while the SPD needs to be straightforward and concise enough for participants to understand, it must also include and accurately summarize all material terms.
Pearce v. Chrysler Grp. LLC Pension Plan, 893 F.3d 339 (6th Cir. 2018).