Disability Plan Cannot Rely on Limitation in Policy that Was Not Disclosed in SPD

A recent ruling from the Seventh Circuit Court of Appeals in Chicago protected employees with conditions such as fibromyalgia or chronic fatigue syndrome who have an insurer deny benefits based on an exclusion that was not properly disclosed to the employee. Weitzenkamp v. UNUM Life Ins. Co., No. 10-3898, 2011 U.S. App. LEXIS 14180 (7th Cir. July 11, 2011). In this case, Weitzenkamp was diagnosed with fibromyalgia, chronic pain, anxiety, and depression. UNUM awarded her long term disability benefits. After two years of paying the benefits, however, UNUM cut off her payments, citing a clause in the policy that limits benefits paid because of a disability dependent on “self-reported symptoms.” The problem was that UNUM also prepared a summary plan description of the plan, and referenced a two-year limitation on benefits in three separate locations (all referencing mental health), but the SPD never mentioned the self-reported symptoms limitation.

The Seventh Circuit Court of Appeals held that the failure to include this important limitation in the SPD was a violation of the part of ERISA that requires the SPD to disclose the material terms of the plan. ERISA § 102. Because UNUM did not disclose this critical limitation in the SPD it distributed to participants, the court held UNUM could not then rely on the limitation in order to terminate benefits. The court did grant a rehearing on this case, and we will track its progress.

If you are a participant in an employee benefit plan and the administrator or insurer denied or terminated your benefits based on a limitation or exclusion not previously disclosed to you, call an ERISA lawyer.