United States Supreme Court Expands Types of Relief Available to ERISA Plan Participants and Beneficiaries

In CIGNA Corp. v. Amara, the Supreme Court recently reviewed whether Section 502(a)(1)(B) of ERISA, which states that a participant or beneficiary may bring a civil action under ERISA to recover benefits due him under the terms of the plan, gives a court authority to reform plan terms to comply with the terms of a misleading summary plan description (“SPD”).  The District Court for the District of Connecticut found that CIGNA had misled participants as to the negative effect that the conversion of CIGNA’s traditional defined benefit plan to a cash-balance plan would have on their benefits, and that CIGNA failed to provide accurate and complete information to participants about these changes as required by ERISA.  The district court, relying on Section 502(a)(1)(B) of ERISA and long established precedent that the terms of the SPD control in such situations, ordered that the plan be reformed to comply with the terms of the SPD, and the Second Circuit Court of Appeals affirmed. 

Upon review, the Supreme Court rejected the notion that Section 502(a)(1)(B) grants a court authority to reform the terms of a plan, holding that Section 502(a)(1)(B) grants a court only the authority to enforce the terms of a plan, not the authority to change them.  In vacating and remanding the Second Circuit’s decision, the Supreme Court also held that reformation of the plan’s terms would be proper under Section 502(a)(3) of ERISA, which allows a participant, beneficiary, or plan fiduciary to “obtain appropriate equitable relief” to redress violations of ERISA or the plan’s terms.  In a departure from long established precedent regarding the remedies available under Section 502(a)(3) of ERISA, the Supreme Court also indicated that monetary relief may also be available to plan participants and beneficiaries who can show that they have been harmed by a violation of the statute.  In light of this decision, plans should carefully review their SPDs to ensure that the terms of the plan are accurately reflected.