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United States Supreme Court Addresses Legal Significance of a Summary Plan Description

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Lauren B. Dunn
Foster Swift Employment, Labor & Benefits Quarterly
Summer 2011

The United States Supreme Court recently held that for purposes of ERISA Sec. 502(a)(1)(b) (recovery of benefits due), the terms of a summary plan description ("SPD") cannot be enforced as terms of the plan it summarizes. In CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), a group of plan participants brought suit claiming, among other things, that disclosures describing their pension plan’s conversion from a defined benefit plan to a cash balance plan failed to provide them with accurate information regarding their benefits. Specifically, the participants argued that the SPD failed to inform them that their accrued benefits under the defined benefit plan could wear away as their respective benefits under the cash benefit plan increased.

The district court held in favor of the plaintiffs and reformed the terms of the cash balance plan. The Solicitor General argued that the district court enforced the terms of the cash balance plan as written which included the terms of the SPD. The Supreme Court reversed reasoning that while ERISA requires plan administrators to furnish an SPD, the "syntax" of ERISA Sec. 102(a) suggests that plan information provided by an SPD is not part of the plan itself. Furthermore, the Supreme Court reasoned that the basic objective of an SPD is to provide clear, simple communication; making the language of an SPD legally binding may lead to plan administrators sacrificing simplicity in order to describe the terms of the plan in the "language of lawyers." Accordingly, the Supreme Court held that the terms of an SPD provide information about a plan but do not constitute terms of the plan for purposes of ERISA Sec. 502(a)(1)(b). Nevertheless, misrepresentations in an SPD can form the basis of equitable relief. Plan Administrators should therefore ensure that the terms of the SPD conform to the terms of the plan.

If you have any questions, please contact a member of the Foster Swift Employment, Labor and Benefits Group.