If a multiemployer plan has a policy requiring an employee to prove entitlement to benefits in a situation where an employer may have underreported covered employment, then that policy must be stated in the plan's summary plan description, according to a 2nd Circuit decision vacating a district court decision on that issue. [Wilkins v. Mason Tenders District Council Pension Fund, 05-2303-cv, 4/21/06]
If a plan participant claimed benefits based on covered work that had not been reported by a participating employer, early practice of the plan had been to require the worker to submit pay stubs as evidence that the underreported work had been performed at the union’s hourly rate. A subsequent change in the plan’s practice dropped the specific insistence on pay stubs, but continued to require a claimant to prove additional covered employment. Neither policy had been expressly described in the plan’s SPD. Nonetheless, since the individual in this case could provide no evidence beyond his own affidavit, the district court ruled against the claim under the arbitrary and capricious standard of review.
The appellate court drew the distinction that while benefit denials are to be reviewed under the arbitrary and capricious standard where the plan gives discretionary authority to the plan administrator, an SPD claim is to be judged de novo, with no deference owed to plan administrators for cases where the SPD has not included information required under the applicable statute and regulations. The appellate court then stated that the claimant “quite clearly” would reasonably anticipate receiving benefits based on covered employment, without addressing the practical question of how a plan fiduciary can reasonably pay benefits without concrete evidence of the claimed employment. Since the plan’s natural policy of expecting concrete data to be presented in a claim dispute could have the obvious outcome of affecting the final benefit determination, the appellate court found the SPD deficient in failing to state the policy.
Obviously, the issue of having complete, accurate data for benefit determinations is not unique to the notorious data issues that plague multiemployer plans – Has there ever been the plan that can absolutely attest to having had perfect data? Yet even more “quite clearly” than the appellate court’s reasoning, plan administrators cannot base benefit payments on nothing more evidentiary than the plan participant’s own affidavit, particularly when one is contesting existing data. Even so, the appellate court’s decision in this case warns plans that their SPDs ought not assume that plan participants understand all details of responsibilities of the parties to a benefits dispute, but should explicitly include any plan policies that might affect the benefit determination.