Lead Opinion
Thе district court granted summary judgment in favor of appellee, Daniel F. Greeley (“Greeley”), on his claims against his former employer, Fairview Health Services (“Fairview”), under ERISA for a faulty summary plan description (“SPD”). Fairview appeals and we reverse.
The issue in this case arises from a single typographical error. On February 20, 1998, Fairview stated in a memo that pathologists such as Grеeley would be eligible for long-term disability benefits until they reached the age of sixty-seven. The accompanying summary of benefits did not contradict this representation. The benefit plan, which was never mailed to employees, however, provided for such benefits only until the age of sixty-five.
In December 1998, Greeley and his attorney, in preparation for an application for disability benefits, received a copy of Greeley’s long-term disability plan. This document stated that disability benefits would be provided until age sixty-five or seventy, or for one to five years, dеpending on the age of disability. By 1999, Greeley had realized that the plan documents conflicted with the memo, but assumed the memo controlled because it described “enhanced” benefits.
In 1999, Greeley quit practicing because of a disabling medical condition. In January 2001, he inquired about the maximum benefit period and a human resources employee sent him a memo explaining that benefits expired at age sixty-five. In October 2003, Greeley’s attorney sent Fair-view a letter requesting assurances that benefits would continue until age sixty-seven, to which Fairview never responded. In October 2004, Fairview informed Greeley that because he had reached the age of sixty-five, his benefits were exhausted. Greeley filed suit in the district court in December 2004, asserting improper denial of benefits and fraud. On cross motions for summary judgment, the district court granted summary judgment for Greeley on his ERISA claim and for Fairview on the fraud claim.
The district court correctly stated that in order to recover under a faulty SPD, Greeley must show that he was prejudiced by it. The court concluded that Greeley was prejudiced and explained the prejudice standard it applied as follows:
It is not clear what showing of prejudice is required under Eighth Circuit law. See Antolik,383 F.Supp.2d at 1177 . The Second Circuit requires a plan рarticipant to show that he or she “was likely to have been harmed as a result of a deficient SPD,” and allows the employer to rebut this showing “through evidence that the deficient SPD was in effеct a harmless error.” Burke v. Kodak Ret. Income Plan,336 F.3d 103 , 113 (2d Cir.2003). The Court adopts this standard and applies it here.
Greeley v. Fairview Health Services,
The district court erred by adopting a “likely harm” prejudice standard. In order for an employee to recоver from his employer for a faulty SPD, this court requires the employee to show he relied on its terms to his detriment.
Indeed, we recently reversed the decision relied upon by the district court, Antolik v. Saks Inc.,
Therefore, in the instant case, assuming arguendo that the February 1998 memorandum was a faulty SPD, Greeley must show that he took action or failed to take
Greeley has failed to make a showing of detrimental reliance. Greeley testified that he had no choice but to go on disability because of the condition of his lungs. The district court specifically stated, “Greeley offered no evidence that he сhanged his course of action or otherwise relied on the faulty SPD.” Greeley, at 3. The district court observed the financial harm to Greeley that resulted from the nonpayment of benefits for two years, but we have previously determined that such financial loss, without detrimental reliance, provides an insufficient basis for recovery. See Maxa,
Accordingly, we reverse the district court’s grant of summary judgment in favor of Greeley and remand for further proceedings consistent with this opinion.
Notes
. Because we reverse the district court's decision on the basis of prejudice, we do not here reach the merits of Fairview's statute of limitations or other arguments for reversal.
. The court may also infer detrimental reliance from egregious misrepresentations. See Monson v. Century Mfg. Co.,
Concurrence Opinion
concurring.
I concur in the court’s judgmеnt reversing the district court’s grant of summary judgment in favor of Greeley but would reach that result in a different manner. The court assumes without deciding that the February 1998 memorandum was a faulty SPD. Ante at 2. I believe that the February 1998 memorandum was not an SPD as a matter of law under Antolik, a determination which necessarily precedes the reliance or prejudice inquiry. See Antolik,
In Antolik, we stated,
We require that a document substantially comply with ERISA’s formal requirements because there should be no accidental or inadvertent SPDs. If a document is to be afforded the legal еffects of an SPD, such as conferring benefits when it is at variance with the plan itself, that document should be sufficient to constitute an SPD for filing and qualification purposes.
Id. at 801 (internal quotations and citations omitted). The formal requirements of an SPD are found in 29 U.S.C. § 1022(b) and 29 C.F.R. § 2520.102-2, 102-3. Id. at 800. The statute requires that an SPD contain the following information:
• the name and type of administration of the plan;
• the name and address of the designated agent for servicе of process, if not the administrator;
• the name and address of the administrator;
• the plan’s requirements respecting eligibility for participation and benefits;
• circumstances which may result in disqualification, ineligibility, or denial or loss of benefits;
• the source of financing of the plan and the identity of any organization through which benefits are provided;
• the date of the end of the plan year and how the plan records аre kept; and
• the procedures for presenting claims for benefits and the remedies for denied claims.
In holding that a letter that Saks, Incorporated had directed to its employees did not constitute an SPD as a matter of law, the Antolik court noted that the letter lacked any indication that it intended to be an SPD, nor did it explain complex plаn provisions regarding termination of a participant’s eligibility, available benefits, claims procedures and remedies for claim denials.
Because I would hold that the February 1998 memorandum was not a faulty SPD as a matter of law, I would not reach the question addressed today by the court, whether Greeley rеlied on or was prejudiced by the February 1998 memorandum, because ' “an ERISA plan cannot be changed by informal amendments, even if employees relied on those amendments.” Antolik,
. The regulations impose further, lengthy requirements for particular types of plans, though it is not entirely clear which of these may apply here.