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Watch Out for Confusing SPD Language
An employee's failure to exhaust the appeals procedure for a disability claim's denial does not prevent the employee from pursuing the claim in court, a federal appeals court held recently. (Watts v. BellSouth Telecomms. Inc., 11th Cir., No. 02-13230, 2003)
The culprit was confusing language in an employer's summary plan description (SPD), leading a worker to believe that she did not have to exhaust an administrative appeals procedure before going to court. The court said it hoped the decision would "help ensure that employers and plan administrators take steps to clarify language that may cause claimants not to exhaust their administrative remedies."
The case involved a worker who received notification that her disability claim appeal was denied and that she had 60 days to file a second and final administrative appeal. The SPD contained two different statements about appeals. On one page, the document indicated an employee should submit an appeal in writing within 60 days to one of several plan-designated decision-makers. On another page, the SPD used model language from the U.S. Department of Labor that stated: "if you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court."
The employee believed the language gave her the right to pursue "either, both, or neither" remedies, the court said. To avoid problems like this, the court advised that SPD language should require plan participants to exercise their appeal rights and that the requested benefits have to be denied, in whole or in part, as a precondition to filing a lawsuit.
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