Opinion ID: 724895
Heading Depth: 2
Heading Rank: 1

Heading: Edwards v. State Farm Mutual Automobile Insurance, Co.

Text: 18 In Edwards v. State Farm Mutual Automobile Insurance, Co., we held that statements made in Summary Plan Descriptions are binding, and if they conflict with statements made in the Plan itself, the Summary Plan Description controls. 851 F.2d 134, 136 (6th Cir.1988). Although Edwards involved disability benefits, rather than welfare benefits, this Court has previously applied the principles of Edwards in the welfare benefit context. See Sprague v. General Motors Corp., 1996 Fed.App. 0265P, 92 F.3d 1425, 1434-35 (6th Cir.1996). The Defendant in Edwards attempted to deny an employee disability benefits. Id. at 135. Under its employee benefit plan, eligibility for disability benefits was calculated by adding the employee's age to the employee's credited service (i.e. the amount of time the employee had worked for the company up to the date of his or her disablement). Id. Only those employees whose age plus amount of credited service totalled fifty-five years or more were eligible for disability benefits. Id. The Summary Plan Description given to the employees by the Defendant stated that time while on sick leave counts for plan membership and ... as credited service.... Id. Under the Summary Plan Description, therefore, Edwards had enough credited service to be eligible for disability benefits. Id. Under the definitions in the Plan document, in contrast, Edwards' time on sick leave was excluded from credited service, and therefore, he did not have enough credited service to be eligible for disability benefits. Id. We held that State Farm could not, in reliance on the Plan document, deny Edwards disability benefits because statements in a summary plan are binding and if such statements conflict with those in the plan itself, the summary shall govern. Id. at 136. 19 Our decision in Edwards recognized the impact that a summary descriptions have on lay beneficiaries. Id. at 136. We noted that employees count on them to provide an accurate picture of their current benefits situation, as well as for information which will allow them to make intelligent decisions about their future benefits needs. Id. Had Edwards been apprised of the Committee's interpretation of the Plan, we reasoned, he could have made 'alternate financial plans,' to guard against the Plan's shortcomings. Id. (quoting Hodgins v. Central States Southeast, 624 F.2d 760, 761 (6th Cir.1980)). As we explained in Edwards, State Farm should have realized that the explicit language and the promises made in their SPD would cause unsophisticated lay employees to rely on the representations. Id. We held, however, that precedent does not dictate that a claimant who has been misled by summary descriptions must prove detrimental reliance. Id. at 137. Instead, we concluded that it is the employer's duty to put the employees on notice of their rights under the plan, and if they fail to adequately do so, they will be precluded from enforcing Plan language which conflicts with summary description language to the detriment of their employees. Id. at 136-37. 20 Our decision in Edwards was also based on the statutory language itself. Id. at 136. We quoted § 1022 of ERISA, which states that summary descriptions must be  'written in a manner calculated to be understood by the average plan participant, and ... sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.'  Id. at 136 (citing 29 U.S.C. § 1022(a)(1)). In addition, we cited the legislative history of ERISA, which explains that [i]t is grossly unfair to hold an employee accountable for acts which disqualify him from benefits, if he had no knowledge of these acts, or if these conditions were stated in a misleading or incomprehensible manner in the plan booklets.. Id. (citing H.R.Rep. No. 93-533, 93rd Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 4646). Reasoning that the summary plan provisions would be useless if the Plan documents were allowed to undermine them, and recognizing that Congress has promulgated a clear directive prohibiting misleading summary descriptions, we declined to undermine that legislative command by imposing technical requirements on employees. Id. at 137 ( 'It is of no effect to publish and distribute a plan summary booklet designed to simplify and explain a voluminous and complex document and them proclaim that any inconsistencies will be governed by the plan. Unfairness will flow to the employee for reasonably relying on the summary booklet.' ) (citing McKnight v. Southern Life and Health Ins. Co., 758 F.2d 1566, 1570 (11th Cir.1985)).