Foster Swift Employment, Labor & Benefits Quarterly
The U.S. Supreme Court has held that equitable relief may be available to employees under ERISA Sec. 502(a)(3) to reform the terms of a pension plan in the event of a fiduciary breach. In the case of Cigna Corp. v. Amara, 131 S. Ct. 1 866, 50 ECB 2569 (2011), the Summary Plan Description ("SPD") prepared for a pension plan stated that the changes made in the amended plan would be an improvement that "significantly enhanced" retirement benefits for plan participants. A lower court held that the description of the amended benefit in the SPD was inaccurate and did not disclose that many participants would receive less favorable benefits under the amended plan. The Supreme Court then held that while the terms of an SPD cannot be enforced as if the SPD was the plan, "misrepresentations in the SPD can form the basis of equitable relief" such as estoppel and reformation. Citing ERISA Sec. 502(a)(3), the Supreme Court ordered the lower court to determine the appropriate remedy, including the equitable remedy of plan reformation, to provide the "enhanced" benefits described in the SPD. The decision of the Supreme Court sends a message to all plan administrators to confirm that the Company’s SPDs reflect the benefits that the Company intends to offer its eligible employees.
Please contact your Foster Swift employee benefits professional for further information.