SPD trumps plan document.

• Author: Cvach, Gary Q.
• Position: Summary plan description

The Fourth Circuit recently reiterated its view that representations in a summary plan description (SPD) control over inconsistent provisions in an official plan document (Aiken v. Policy Management Systems Corp., 4th Cir., 1993). Plan sponsors should be concerned about this case because it reflects the views of at least five other circuits, and because the court maintained its position even though the plan, as with most plans, contained language stating that the plan document would control.

In Aiken, an employee accused of sexual harassment was offered the choice of resigning or being fired. The employee opted for resignation "under protest." The employee claimed that he resigned in part because he believed he would be immediately eligible for his retirement benefits. He based his claim for benefits on the SPD, which on its face indicated that he was entitled to a lump-sum distribution of his vested benefits. The employer, Policy Management Systems (PMSC), denied his claim because the terms of the plan itself did not provide for such a distribution. On cross-motions for summary judgment, the district court concluded that the terms of the plan controlled over those of the SPD and dismissed the employee's claim. It alternatively found that even if the SPD controlled, the employee was not entitled to recover; he had failed to demonstrate reliance on the SPD or any resulting prejudice. In effect, the court of appeals overruled the district court on both issues, ruling that the case was not ripe for summary judgment.

The specific provision in the SPD on which the employee based his claim stated, "...if a participant...