The key litigated issues in Johnson v. Prudential Insurance Company, which involved a claim for benefits under an employer's accidental death and dismemberment (AD&D) policy, were whether:

The employee in this case, who was covered under an accidental death and dismemberment policy sponsored by her employer and administered by Prudential Insurance Company, was killed when her vehicle crashed into a concrete highway median. A toxicology report indicated that the employee's blood alcohol level at the time of her death was well above the legal limit, and a receipt in her wallet showed that she had made a $48 purchase at a bar shortly before her death.

Based on this evidence, the insurer denied the claim for benefits under the policy brought by the employee's two beneficiaries. The insurer reasoned that death resulting from a car accident involving the illegal use of alcohol was one of the "losses not covered" under the policy. The beneficiaries appealed this decision, but the insurer upheld its decision on administrative appeal. The beneficiaries then filed this lawsuit under ERISA, seeking judgment on the administrative record.

The insurer argued that the court should review its decision using the deferential "arbitrary and capricious" standard of review because two documents gave the insurer discretionary authority to interpret the policy:

The beneficiaries argued that neither of these documents gave the insurer discretionary authority, and so the court should review the insurer's decision using the de novo standard. Regarding the wrap plan, the beneficiaries argued that:

The US District Court for the Southern District of Ohio ruled in favor of the insurer in an opinion issued on October 31, 2012. The court reasoned that the wrap plan document contained nearly all of the substantive requirements for a written plan document under ERISA, whereas the plan booklet satisfied none of the statutory requirements and focused on administrative issues (for example, the types of AD&D covered by the policy). The court observed that neither the wrap plan nor the plan booklet were complete without the other in that:

The court also noted that other courts had:

Having concluded that the wrap plan was part of the "written document" that established an ERISA plan, the court next addressed whether the wrap plan granted the insurer discretion to interpret plan terms. The court held that the relevant wrap plan language was plainly sufficient to grant the insurer discretion to interpret the plan. Though acknowledging that there was no formal delegation of discretion from the employer to the insurer, the court concluded that the wrap plan and the plan booklet, taken together, carried out that delegation because:

As a result, the court held that an arbitrary and capricious standard was appropriate and that the insurer's interpretation of the policy was reasonable under this standard.

Although wrap plan documentation is a standard method for supplementing health and welfare insurance contracts (which might not contain all the ERISA-required content), reported cases addressing the legal consequence of wrap plans are not all that common. The district court in this case affirmed the wrap plan approach by concluding that the wrap plan at issue is part of the "written instrument" required to establish an ERISA plan. However, this case also underscores the need for a clear designation in the governing plan documents of discretionary authority to interpret plan terms in the event, as in this case, the decisionmaker's interpretation is called into question in litigation.