The Future of Summary Plan Descriptions (SPD)

A recent court case decision, Collingsworth versus AIG Life Insurance Company, may render SPDs to be of no use in the future. A federal judge in Texas, in his ruling of a lawsuit against a long-term disability insurer, found the SPD in that case to be ambiguous.

The ambiguous passage in this SPD is a very much used disclaimer in all SPDs stating, "In the case of any discrepancy between this SPD and the official plan documents, the official plan documents always govern."

The judge, in his ruling stated that accepting the above disclaimer as legal, would invalidate the Employment Retirement Income Security Act (ERISA) that an SPD be provided for all plans governed by ERISA. If the participant is required to read the Plan as well as the SPD, then the SPD serves no purpose whatsoever.

Future drafters of SPDs need to look at this ruling and any future rulings on this subject!