Last fall, we blogged about the case of CIGNA v. Amara, in which the Supreme Court was being asked to make it harder for employees to hold their employers accountable for providing inaccurate summaries of major changes in their pensions plans. (See our November blog post for more background.) This week, the Supreme Court issued an opinion in the case, ruling for CIGNA 8-0 (with Justice Sotomayor recused), with Justices Scalia and Thomas concurring in the judgment.
Several years ago, CIGNA gave its employees an intentionally misleading summary of a change in its pension plan, one that did not reveal some of its financial disadvantages. Citing a particular provision of ERISA (the Employee Retirement Income Security Act), the 27,000 employees in this pension plan sued. The trial court ruled in their favor and reformed the pension plan to the employees' benefit, a ruling that was upheld by the circuit court. CIGNA appealed to the Supreme Court, positing a legal theory that would have made it significantly harder for wronged employees to recover.
Yesterday, the Court unanimously agreed that the provision of ERISA that the employees were suing under did not authorize the relief granted by the lower courts. Justices Scalia and Thomas would have ended the inquiry there, handing a complete defeat to the workers. However, the majority, in an opinion written by Justice Breyer, ruled that employees may be able to rely on another part of ERISA, a general catch-all provision allowing plaintiffs “to obtain other appropriate equitable relief” for violations of ERISA. The Court remanded the case to the lower court to determine what that relief might be.
The Court also disagreed with CIGNA's extreme view that each individual employee must show that they actually relied on the summary to their detriment – in other words, that they (1) actually read the summary document all those years ago; (2) had no knowledge of plan terms contradicting the summary; and (3) relied on the summary to make a detrimental employment or retirement decision that they would not otherwise have made (e.g., prove that they would have moved to a company with better retirement benefits but for the misleading summary).
Since we don't really know if corporations will ultimately be held responsible to any meaningful degree if they provide misleading summaries of pension plans, whether the opinion was a win for employees or employers depends on who you ask. Bloomberg characterized it as a "partial win" for CIGNA.
A U.S. Supreme Court sent an important reminder to retirees this week: you can't necessarily rely on your employer for an accurate description of your pension benefits. ...
Legal experts differed yesterday on whether the ruling was a win for Cigna and other plan sponsors, or for the beneficiaries — although pension advocates were confident the decision ultimately will produce a victory for employees when the lower court ultimately rules.
And as reported in Life and Health Insurance News:
"CIGNA is pleased that the U.S. Supreme Court has ordered the lower court to reconsider its initial decision and undertake further proceedings in the case," CIGNA says in a statement about the ruling.
Ellen Doyle, a Pittsburgh lawyer who helped represent the plan participants in the class-action lawsuit, called the ruling a "significant loss for employees."