In passing the Employee Retirement Security Act of 1974 (“ERISA”), Congress sought to make it as easy and economical as possible for employers to provide benefits to their workers; for example, pensions, health insurance, life insurance and long-term disability (LTD) insurance.  However, because many of the statutes that govern benefit plans are so complicated, and since the regulations issued by the U.S. Department of Labor frequently are so convoluted, one must wonder if that goal will ever be realized.  A new decision by the Ninth Circuit may bring a bit more clarity to ERISA waters, but it also likely will make it more complex and costly for employers to offer LTD benefits to employees.

In Prichard v. Metropolitan Life Ins. Co., Ninth Circuit Case No. 12-17355, an employer outlined the LTD benefits it offered to employees in a document called a Summary Plan Description (“SPD”).  So far so good, as this is a widespread practice.  In so doing, the employer did not create a separate document known as a plan instrument.  Instead, the employer treated the SPD as the plan instrument – which also is a generally permissible and somewhat common practice.  As one would expect, the employer also obtained an insurance certificate from the carrier who would administer claims and provide benefit payments to eligible disabled employees. 
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