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November 5, 2008 DOL Home > SOL > Briefs > Mario Amicus Brief |
Mario Amicus Brief TABLE OF CONTENTS INTEREST OF THE DEPARTMENT OF LABOR A. Statement
of the Facts B. Decision
Below An
SPD Need Not Contain Information Concerning the Discretion Afforded the Plan
Administrator to Interpret Plan Terms TABLE OF
AUTHORITIES CASES Atwood v. Newmont
Gold Co., Inc., 45 F.3d 1317(9th Cir. 1995) Cagle v. Brunner,
112 F.3d 1510 (11th Cir. 1997) Firestone v.
Bruch, 489 U.S. 101 (1989) Mario v. North
American Health Plans, Inc. and P&C Food Markets, Inc., No. 98-CV-264A (Mag. March 12, 2001) Martin v. Blue Cross & Blue Shield of VA, Inc, 115 F.3d 1201 (4th 1997) Secretary of Labor v. Fitzsimmons, 805 F.2d 682 (7th Cir. 1986) The Utah Alcoholism Foundation v. Battelle Pacific Northwest Laboratories Non-Bargaining Unit Employees' Comprehensive Medical Benefits Plan,
204 F. Supp.2d 1295 (D. Utah 2002) Wald v. Southwestern
Bell Corp. Customcare Medical Plan, 83 F.3d 1002 (8th Cir. 1996) STATUTES 29 U.S.C. § 1022 29 U.S.C. § 1022(b) 29 U.S.C. § 1024(b)(2) and (4) 29 U.S.C. § 1104(a)(1)(D) 42 U.S.C. § 2000e et seq 29 C.F.R. § 2510.102-2 29 C.F.R. § 2520.102-3 29 C.F.R. § 2520.102-3(1) 29 C.F.R. § 2520.102-3 (t)
29 C.F.R. § 2520.102-3(t)(2) 29 C.F.R. § 2560.503-1(h)(3)(ii) MISCELLANEOUS 11 BNA Pension Reporter 653-54
New York Human Rights Law, N.Y. Executive Law § 296
Whether ERISA § 102, 29 U.S.C. § 1022, or the
corresponding regulations, 29 C.F.R. § 2510.102-3, require a summary plan
description ("SPD") to state that the plan itself grants the plan
administrator discretion to interpret the plan in order for the plan
administrator's exercise of discretion to be given deference upon judicial
review.
INTEREST OF THE DEPARTMENT OF LABOR
The Secretary of Labor has primary enforcement
authority for Title I of ERISA. The
Secretary's interests in this regard include promoting uniformity of law,
protecting beneficiaries, enforcing fiduciary standards, and ensuring the
financial stability of employee benefit plan assets. Secretary of Labor v. Fitzsimmons, 805 F.2d 682 (7th Cir.
1986) (en banc). Furthermore, the
Secretary issued the regulation at the center of the dispute in this case. Thus, the Secretary has a specific and
substantial interest here in assuring that the court correctly interprets and
applies her regulation. This brief is
submitted in response to the court's order of July 12, 2002, inviting the
Secretary to express her views on the issue of whether, under the relevant
statutory and regulatory provisions, an SPD must specify that discretion is
given to the plan administrator. A. Statement of the facts Marc Mario, the plaintiff, was born in 1955 as Margo
Mario, a female. Mario v. North
American Health Plans, Inc., 98-CV-264A, slip op. at 2 (Mag. March 12,
2001). In September 1996, Mario
underwent a hysterectomy and double mastectomy as treatment for the
"gender dysphoria," or transsexualism, from which he allegedly
suffered. Id. He then sought reimbursement through his
employer's ERISA-covered health care plan.
Id. After researching
gender dysphoria and possible treatments, the plan administrator denied Mario's
claim on the grounds that the surgery was not "medically necessary"
within the meaning of that term under the plan. Id. at 3. Mario then sought judicial review of the benefit
determination. He alleged that the plan
had improperly denied him benefits and that he had been discriminated against
on the basis of his gender in violation of Title VII of the Civil Rights Act of
1964, 42 U.S.C. 2000e et seq., and Section 296 of the New York
Human Rights Law, N.Y. Executive Law § 296.
Mag. Recommendation at 2. B. Decision below The plan administrator filed a motion for summary
judgment, arguing that he had not acted arbitrarily and capriciously in denying
Mario's claim for medical benefits, and that the plan's refusal to cover the
hysterectomy and mastectomy did not constitute sex discrimination under the
federal or state discrimination laws.
The district court, adopting the magistrate judge's report and recommendation,
granted the administrator's motion, holding that the administrator was entitled
to deference because the plan document gave it discretionary authority over
questions of plan interpretation.[1] Mario v. North American Health
Plans, Inc. and P&C Food Markets, Inc., No. 98-CV-264A, slip op. at 2
(W.D.N.Y. Sept. 26, 2001). The
magistrate judge had rejected Mario's argument that the SPD must refer to the
administrator's discretionary authority for an arbitrary and capricious
standard to apply. Mag. Recommendation
at 5. The magistrate judge deferred to
the administrator's decision, finding that "[t]he requisite grant of
authority may be derived from any number of plan documents, including the plan
itself." Id. Mario timely appealed. After the case was briefed and oral argument heard, the Court of
Appeals ordered the parties to brief the issue outlined above and requested
that the Secretary of Labor also brief the issue. ARGUMENT
AN
SPD NEED NOT CONTAIN INFORMATION CONCERNING THE DISCRETION AFFORDED THE PLAN
ADMINSITRATOR TO INTERPRET PLAN TERMS ERISA requires that an SPD be furnished to plan
participants and beneficiaries. ERISA §
102, 29 U.S.C. § 1022. ERISA further
provides that the SPD "shall be written in a manner calculated to be
understood by the average plan participant, and shall be sufficiently accurate
and comprehensive to reasonably apprise such participants and beneficiaries of
their rights and obligations under the plan." Id. Thus, the
purpose of the SPD is to provide plan participants with a summary of the
information necessary for them to understand the benefits available under the
plan, as well as their rights and obligations as plan participants. In order to flesh out these requirements, both the
text of the statute and the accompanying regulations identify specific items to
be disclosed in the SPD. These include
the name and type of administrator of the plan, whether a health insurance
issuer is responsible for the financing or administration of the plan, the name
of the agent for service of legal process, the names of the trustees and
administrator, eligibility requirements for participation and benefits, the
source of plan financing, the procedure for presenting claims for benefits
under the plans, and, as most relevant here, circumstances that may result in
disqualification, ineligibility, denial, or loss of benefits. ERISA § 102(b), 29 U.S.C. § 1022(b); 29
C.F.R. § 2520.102-3. This detailed list of mandatory disclosures does not
expressly require an SPD to specify whether the plan gives the plan
administrator discretion over matters of plan interpretation. This Court has asked, however, whether such
a grant of discretionary authority comes under the rubric of
"circumstances which may result in . . . denial . . . of any benefits that
a participant . . . might otherwise reasonably expect the plan to
provide." 29 C.F.R. §
2520.102-3(l). Although the Secretary
has not previously addressed the issue, the Secretary has concluded, based on
both the text and purposes of the relevant statutory and regulatory provisions,
that a grant of discretion is not a "circumstance[] that may result in the
denial of benefits", and therefore
an SPD need not include information on whether the plan grants
discretion in interpreting the plan document to the plan administrator.[2] As the Secretary's regulation recognizes, it is
important in this regard for participants to know the circumstances that may
result in a denial of benefits so that they do not forfeit valid claims by
failing to exercise their rights or fulfill their obligations (e.g., by
filing untimely or making improper claims).
The grant of authority to interpret plan provisions, however, is not a
circumstance that could cause a loss or denial of benefits, such as a failure
to pay employee contributions, an untimely filing of an appeal, or plan
termination. The grant of such
discretion is no more likely to result in a denial of benefits than in a
determination favorable to the claimant, as the administrator must, in any
case, follow the terms of the plan.
ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D). Indeed, the grant of discretion primarily
functions simply to determine the standard of judicial review after the
claims process is complete and litigation has begun. See 29 C.F.R. § 2560.503-1(h)(3)(ii) (a group health plan
must "provide for a review that does not afford deference to an initial
adverse benefit determination").
Where a plan grants discretion, a reviewing court must then defer to the
administrator's interpretation of the plan.
Firestone v. Bruch, 489 U.S. 101, 115 (1989) (if the plan gives
the administrator discretionary authority over plan interpretation, the courts
should apply a deferential standard of review to the administrator's benefit
decisions). Knowledge of the discretion
granted to the plan administrator and the resulting standard of review would
not further in any way a participant's understanding of the circumstances that
could cause a denial of benefits, nor would it help participants avoid
potentially harmful procedural missteps or assist them in understanding their
substantive rights under the plan. The
SPD, therefore, need not include that information. The model
statement of ERISA rights set forth in the regulation does not include a
statement concerning the plan administrator's discretion or the governing
standard of review. 29 C.F.R. §
2520.102-3(t). This model statement is
designed to inform participants of their procedural rights under ERISA,
including their rights to internal appeals and judicial review. Id.
An SPD adequately informs participants of their procedural rights if it
includes the statements set forth in the model. 29 C.F.R. § 2520.102-3(t)(2).
Because the Secretary did not include a reference to the discretion
granted to a plan administrator in the model statement, in her view an SPD need
not mention that discretion in order to meet this requirement. Thus, in the Secretary's view, there are no
grounds upon which to require the SPD to inform participants about the
deference, if any, granted the plan administrator. This conclusion comports with the decisions of every
appellate court to have considered the issue.
These courts unanimously held that the SPD need not include information
on the discretion granted the plan administrator in order to comply with ERISA
§ 102, 29 U.S.C. § 1022. Cagle v.
Brunner, 112 F.3d 1510, 1517 (11th Cir. 1997) (rejecting plaintiff's
argument that an explanation of the discretion held by the plan administrator
must be in the SPD); Wald v.
Southwestern Bell Corp. Customcare Medical Plan, 83 F.3d 1002, 1006 (8th
Cir. 1996) (an SPD need not contain a description of a plan administrator's
discretion); Atwood v. Newmont Gold Co., Inc., 45 F.3d 1317, 1321 (9th
Cir. 1995) (holding that the provision regarding discretion "has no
bearing on the events or actions determinative of eligibility
under the plan" and therefore need not be included in the SPD); accord
The Utah Alcoholism Foundation v. Battelle Pacific Northwest Laboratories
Non-Bargaining Unit Employees' Comprehensive Medical Benefits Plan, 204 F.
Supp.2d 1295, 1301 (D. Utah 2002); cf. Martin v. Blue Cross &
Blue Shield of Va, Inc, 115 F.3d 1201, 1205 (4th Cir. 1997)
(holding that a plan provision conferring the discretion did not conflict with
SPD, which was silent on the issue, and that provision conferring discretion
was therefore controlling). This Court should follow the lead of its sister courts
and decline to add new disclosure requirements that tell participants little or
nothing about the substantive terms of their plans or how to effectively assert
their claims. It is important that the
SPD remain a "summary" document if it is to serve its function of
advising participants of important rights and obligations "in a manner
calculated to be understood by the average plan participant." ERISA § 102, 29 U.S.C. § 1022; 29 C.F.R. §
2520.102-2. As a summary document, the
SPD need not and should not include every plan provision, or it runs the risk
of diverting participants' attention from what is most relevant to protecting
their rights and protecting their interests.
For this reason, the statute and the regulation require an SPD to inform
participants concerning the most important information about their plan, and to
do so in a manageable, summary form. Significantly, the inclusion of a reference to the
administrator's discretion would not enhance the typical participant's
understanding of his plan or his rights, even if accompanied by a technical
explanation of the standard of review under Firestone and the
relationship between the Supreme Court's holding in Firestone and the
grant of discretion to the plan administrator.
Furthermore, if a participant wants information beyond that required in
the SPD, including information on the administrator's discretion, the
participant can obtain it since ERISA requires that the plan documents be made
available to participants to view in a central location as well as copied upon
request. ERISA §§ 104(b)(2) and (4), 29
U.S.C. § 1024(b)(2) and (4). Requiring that an SPD contain information on the
discretion granted to the plan administrator and the resulting standard of
judicial review, however, would not further the statutory goal of providing
necessary information to participants in an understandable and summary form. For the reasons cited above, the court should rule
that nothing requires an SPD to identify the discretion granted to a plan
administrator. Respectfully submitted this 10th day of September,
2002, ____________________________ Sara Pikofsky [1] The court also ruled in favor of the defendant on the claims arising under Title VII and the New York Human Rights Law. [2] The Secretary has interpreted the disputed
language in the context of plan terminations.
In published guidance, she stated that plan termination is a
circumstance which may result in a denial or loss of benefits and that the SPD
must include termination provisions. 11
BNA Pension Reporter 653-54 (May 14, 1984).
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