Wagner Logo

Follow us on Twitter View our profile on LinkedIn Like us on Facebook 

 

 

 

The Wagner Law Group

The Wagner Law Group is a nationally recognized practice in the areas of ERISA and employee benefits, estate planning, employment, labor and human resources and investment management.

 

Established in 1996, The Wagner Law Group is dedicated to the highest standards of integrity, excellence and thought leadership and is considered to be amongst the nation's premier ERISA and employee benefits law firms. The firm has seven offices across the country, providing unparalleled legal advice to its clients, including large, small and nonprofit corporations as well as individuals and government entities worldwide. The Wagner Law Group's 29 attorneys, senior benefits consultant and four paralegals combine many years of experience in their fields of practice with a variety of backgrounds. Seven of the attorneys are AV-rated by Martindale-Hubbell and six are Fellows of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers.  Seven of the firm's attorneys have been named to the prestigious Super Lawyers list for 2017, which highlights outstanding lawyers based on a rigorous selection process.

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Boston 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

 

Washington, D.C.

Tel: (202) 969-2800

 

Fax: (202) 969-2568

 800 Connecticut Avenue, N.W.

Suite 810

Washington, D.C. 20006

 

Chicago

Tel: (847) 990-9034

Fax: (847) 557-1312

190 South LaSalle Street

Suite 2100

Chicago, IL 60603

 

  

Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

Tampa

Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 

  

San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104

  

St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
25 W. Moody Avenue
St. Louis, MO  63119 

 

 

www.wagnerlawgroup.com

 

 

 

 

  ACA Does Not Prohibit Lifetime

Benefit Caps for Retiree-Only

Benefit Plans

September 21, 2017

 

 

 

The Ninth Circuit Court of Appeals, in King v. Blue Cross and Blue Shield of Illinois, has ruled that the ACA does not prohibit lifetime benefit maximums for retiree-only plans. However, the court also determined that the lifetime benefit maximum contained in an employer's retiree benefit plan did not apply because the Summary of Material Modifications used (by the employer) to communicate the lifetime benefit maximum to plan participants did not meet ERISA's requirements.

Facts. The plaintiff in King, became a participant in the employer's retiree-only plan one year after the ACA was enacted.   The plan's benefits were outlined in a 2006 Summary Plan Description that included more than a dozen SMMs that disclosed certain subsequent changes made to the plan, including a 2010 SMM that disclosed the plan's lifetime limit on benefits.

In 2012, a retiree plan participant required a major surgery for which she received initial approval from the insurer. After undergoing the treatment, however, the insurer denied her claim for benefits because she had exceeded the plan's $500,000 lifetime limit. In response, the participant sued the insurer and employer, claiming breach of contract and breach of ERISA fiduciary duties by the defendants. One of the participant's claims was that the 2010 SMM used to disclose the lifetime limit did not reasonably explain the modification to the average plan participant and, therefore, violated ERISA's requirements.  

At trial, the district court granted summary judgment to the employer on the basis that the ACA did not amend ERISA to prohibit lifetime benefit maximums for retiree-only plans. In turn, the participant timely appealed to the Ninth Circuit.

Ninth Circuit. The Ninth Circuit ruled that ERISA, as amended by the ACA, does not prohibit lifetime benefit limits for retiree-only plans because of a specific exception to the general rule for certain retiree-only plans.

The Ninth Circuit, however, agreed with the participant's claim that the 2010 SMM used to disclose the plan's lifetime benefit limit violated ERISA's disclosure requirements. In particular, the court found that the format of the plan's SMMs required a plan participant to read the entire SPD and all 25 pages of subsequent SMMs to determine the current language for each benefit provision. The court also noted that the 2010 SMM required participants to notice subtle changes in font type, headings and spacing between sections to detect what changes had been made by the ACA's enactment.

In light of the deficiencies of the 2010 SMM, the Ninth Circuit determined that the district court was wrong to dismiss the participant's breach of fiduciary duty claim, which requires plan administrators to convey accurate information. Accordingly, the court remanded the matter back to the district court for further review in accordance with its determination. 

Employer Takeaway: Although one or two changes to an SPD may be disclosed to participants through an SMM, after a series of changes, in order to properly communicate with plan participants, employers should consider a consolidated SMM with all plan changes or, better still, a revised SPD that provides participants with up-to-date information about their benefit plan.

 

 

 

 

 

This Newsletter is protected by copyright. Material appearing herein may be reproduced with appropriate credit.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.