A federal court has found that merely posting a summary plan description (“SPD”) on a company intranet did not satisfy the electronic disclosure rules under ERISA. In Thomas v. CIGNA Group Ins., the court held that posting on an intranet without additional action does not satisfy ERISA’s distribution requirements.
Background. In Thomas, the participant was covered by life insurance that was provided through her employer’s ERISA-covered employee benefit plan. The participant became disabled, stopped working and also stopped paying premiums towards the life insurance. Although the policy had a waiver of premium provision for disability, the participant had not applied for the waiver within the specified time period and, according to the insurer, died after the policy had lapsed.
Following the participant’s death, her beneficiary filed a claim for life insurance. The insurer denied the beneficiary’s claim, arguing that the participant did not request a premium waiver and, therefore, was not covered by the plan at the time of death. In response, the beneficiary sued the employer and insurer, claiming that participant did not apply for the premium waiver because the employer failed to communicate this requirement.
Legal Proceedings. At trial, the employer argued that the participant should have known about the waiver requirements because they were included in the plan’s SPD. However, the employer did not specifically distribute the SPD to plan participants, but rather made it available to participants by posting the SPD on its intranet site.
The Court noted that “the regulations relating to the disclosure of SPDs through electronic means require the SPD be ‘furnished,’ not simply made available. ERISA requires the administrator of an employee benefit plan… to make certain disclosures to participants, beneficiaries and other specified individuals…. Moreover, materials which are ‘required’ to be furnished to all participants covered under the plan and beneficiaries receiving benefits under the plan (other than beneficiaries under a welfare plan) must be sent by a method or methods of delivery likely to result in full distribution.”
The court found that the employer’s posting failed to satisfy ERISA’s disclosure requirements for SPDs and ruled in favor of the plaintiff.
Action Steps for Employers. In the wake of Thomas, employers that rely on electronically distributing ERISA disclosures, including SPDs, must be cognizant that failure to comply with DOL rules can be a costly mistake. Accordingly, employers are advised to periodically review their electronic distribution processes to assure that they are adequate and that they are being followed.