Supreme Court Rules SPD Does Not Trump Plan Document, but Emphasizes Availability of Equitable Remedies Where Employer Misleads

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The Supreme Court of the United States in the CIGNA decision confirms, in what may be hailed as a victory for plan sponsors, that information contained in a summary plan description does not itself constitute the “terms” of a benefit plan for purposes of filing claims for benefits. However, the majority’s assertion that participants have a vast arsenal of equitable relief under ERISA section 502(a)(3) will likely invigorate both participants and plaintiffs’ attorneys. Because the surcharge remedy is one of the few equitable remedies that provide monetary relief, a likely increase in claims alleging notice violations and seeking a surcharge to plan participants is anticipated.

On May 16, 2011, the Supreme Court of the United States issued a highly anticipated decision in CIGNA Corporation v. Amara, in which it vacated a district court order requiring CIGNA to reform its cash balance plan and pay increased benefits based on a claim under Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA). In a unanimous opinion, the Supreme Court held that 502(a)(1)(B), which permits a participant to “recover benefits due to him under the terms of his plan,” does not authorize a court to modify plan terms on the grounds that those terms were misrepresented in the plan’s summary plan description (SPD). The Supreme Court also signaled, however, that Section 502(a)(3) of ERISA, which authorizes a participant “to obtain other appropriate equitable relief,” might permit the district court’s reformation of the plan, and it remanded the case back to the district court to decide that issue.

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