A federal court has found
that merely posting a summary plan description ("SPD") on a
company intranet did not satisfy the electronic disclosure rules
under ERISA. In Thomas v. CIGNA Group Ins., the court held
that posting on an intranet without additional action does not
satisfy ERISA's distribution requirements.
Background. In Thomas, the participant was covered
by life insurance that was provided through her employer's
ERISA-covered employee benefit plan. The participant became disabled,
stopped working and also stopped paying premiums towards the life
insurance. Although the policy had a waiver of premium provision for
disability, the participant had not applied for the waiver within the
specified time period and, according to the insurer, died after the
policy had lapsed.
Following the participant's
death, her beneficiary filed a claim for life insurance. The insurer
denied the beneficiary's claim, arguing that the participant did not
request a premium waiver and, therefore, was not covered by the plan
at the time of death. In response, the beneficiary sued the employer
and insurer, claiming that participant did not apply for the premium
waiver because the employer failed to communicate this requirement.
Legal Proceedings. At trial, the employer argued that the
participant should have known about the waiver requirements because
they were included in the plan's SPD. However, the employer did not
specifically distribute the SPD to plan participants, but rather made
it available to participants by posting the SPD on its intranet site.
The Court noted that
"the regulations relating to the disclosure of SPDs through
electronic means require the SPD be 'furnished,' not simply made
available. ERISA requires the administrator of an employee benefit
plan... to make certain disclosures to participants, beneficiaries
and other specified individuals.... Moreover, materials which are
'required' to be furnished to all participants covered under the plan
and beneficiaries receiving benefits under the plan (other than
beneficiaries under a welfare plan) must be sent by a method or
methods of delivery likely to result in full distribution."
The court found that the
employer's posting failed to satisfy ERISA's disclosure requirements
for SPDs and ruled in favor of the plaintiff.
Action Steps for
Employers. In the wake of Thomas,
employers that rely on electronically distributing ERISA disclosures,
including SPDs, must be cognizant that failure to comply with DOL
rules can be a costly mistake. Accordingly, employers are advised to
periodically review their electronic distribution processes to assure
that they are adequate and that they are being followed.