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the claim. The plan administrator must provide a claimant with written or electronic notification
of a plan’s benefit determination on review. The notification in the case of an adverse benefit
determination must set forth specific information, which includes (i) the specific reason or
reasons for the adverse benefit determination, (ii) reference to the specific plan provision on
which the benefit determination is based, (iii) a statement that the claimant is entitled to receive
reasonable access to, and copies of, all documents, records and other information relevant to the
claimant’s claim for benefits, and (iv) a statement describing any voluntary appeal procedures
offered by the plan, and a statement of the claimant’s right to bring an action under section 502
of ERISA.
Under the regulation, the term “adverse benefit determination” is defined in pertinent part as “a
denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part)
for, a benefit, including any such denial, reduction, termination or failure to provide or make
payment that is based on a determination of a participant’s or beneficiary’s eligibility to
participate in a plan ….” 29 CFR Section 2560.503-1(m)(4).
Some plans impose a limitation on the time by which a beneficiary must file a legal action to
challenge the denied claim. For example, the testimony of Petros Koumantaros, Managing
Shareholder & Chief Executive Officer of Spectrum Pension Consultants, Inc., included
provisions from a prototype plan which requires a beneficiary to file an action with respect to the
denied claim within 180 days following the date of the plan fiduciaries’ final denial.
Plans typically contain language in which the plan fiduciary is granted the discretionary authority
to interpret the plan’s provision. In such event, a court will review the decision of the plan
fiduciary under a deferential abuse of discretion standard of review.
2. Interpleader action when there is a payment dispute
In cases where there are competing claims to a benefit, a plan may elect to initiate a lawsuit,
called an interpleader action, in a federal or state court. In an interpleader action, the plan, acting
as the plaintiff-stakeholder, will commence a lawsuit alleging, among other things, that (i) it has
no claim to the benefit, (ii) there are competing claimants; and (iii) it does not know to which
claimant the benefit should be delivered. In the action, the plan names the competing claimants
as defendants and seeks the court’s direction as to which defendant(s) is the proper beneficiary
entitled to the contested benefit. The defendants will each have an opportunity to present the
merits of their case and the court will issue its decision. In some cases, the plan document
expressly authorizes the plan fiduciary to file such an action. For example, the Spectrum
Pension Consultants prototype plan contains the following provision:
Inability to Determine Beneficiary. In the event that the Plan Administrator is
unable to determine the identity of a Participant’s Beneficiary under
circumstances of competing claims or otherwise, the Plan Administrator may file
an interpleader action seeking an order of the court as to the determination of the
Beneficiary. The Plan Administrator, the Trustee and other Plan fiduciaries may
act in reliance upon any proper order issues … in maintaining, distributing or