Do What You Say You Are Going to Do

Two recent cases illustrate the risks of allowing plan practices to diverge from plan documents. In one case, Acosta v. Macy’s, the Department of Labor has brought a lawsuit against Macy’s department store for (among other things) changing the payment methodology for calculating out-of-network claims without appropriately modifying the Macy’s plan document. In the other case, Erwood v. Life Ins. Company of North America, an administrator’s failure to follow documented plan procedures triggered a $750,000 judgment. Both of these cases highlight how easy it is to overlook the fundamental ERISA responsibility of ensuring that plan administration syncs up with the plan documentation. And, both of these cases highlight the risks posed by such failure.