Sixth Circuit Enforces SPD as the Plan in Subrogation Action

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Plan sued to recover funds received by beneficiary from third party in settlement of tort claim.  The court rejected the tort plaintiff’s argument that the subrogation language was not enforceable as part of the “Plan”, as such language was found only in the SPD. “The NEI Trust Agreement is a foundational document that, among other things, authorizes the Board of Trustees to adopt a written welfare benefits plan, to administer the plan, and to act as plan fiduciary. It covers such items as the establishment of a trust fund to finance benefits, the composition, duties, and powers of the trustees, and the operation of the board. Central to the agreement is the authority of the trustees to ‘adopt a Plan of Welfare Benefits, which sets forth eligibility requirements, type, amount, and duration of benefits that are to be provided to eligible employees.’ The Plan must be in writing and set out ‘the detailed basis on which payment of benefits is to be made pursuant to this Trust Agreement check it out.’  The NEI Board approved a summary plan description—the SPD mentioned above. But, because it was the only document other than the Trust Agreement that was drawn up, John McGowan, the Plan’s director of health claims administration, explained in his deposition that the SPD constituted the Welfare Benefits Plan provided for in the Trust Agreement, as well as the summary of the Plan—in other words, two documents in one.  The court thus rejected Moore’s argument that the Trust Agreement was the controlling ‘welfare benefit plan’ and that because the subrogation provision appeared only in the SPD, not the Trust Agreement, it was not enforceable against the proceeds of his settlement in the state-court negligence action. Moore now contends that the district court erred, pointing to the Supreme Court’s observation in Amara that ‘summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan.’  In Amara, however, it was clear that one document functioned as the plan itself, that a different document functioned as the summary plan description, and that the two documents contained conflicting terms. Nothing in Amara prevents a document from functioning both as the ERISA plan and as an SPD, if the terms of the plan so provide.” Board of Trustees v. Moore, No.14-4048 (6th Cir. Aug. 25, 2015).

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