For a few years now, I’ve been following the case if CIGNA v. Amara – an important employee benefits case that went before the U.S. Supreme Court last December. You can find all the posts here.
Today, in an 8-0 decision (download here), the Court clarified an area of the law in need of understanding and will have huge implications in the ERISA arena.
At issue was the following question:
Must participants who are members of a class action suit prove detrimental reliance on an inaccurate summary plan description in order to receive a remedy under ERISA, or is the mere proof of “likely harm” enough to justify equitable relief?
Or to put in "Plain English" from the SCOTUSBlog:
Federal law requires employers that offer their workers employment benefits to lay out the terms of the benefit plan in a detailed plan document, but also to provide workers with a summary plan description. When the summary describes more generous benefits than the actual plan document, is the worker entitled to the more generous benefits only if she shows that she relied on the erroneous summary, or is it enough for the worker to show that employees were likely harmed by the discrepancy?
The Court here said that "detrimental reliance" need not be shown but also said that there are multiple types of approaches that could be used. Thus, to obtain relief for some ERISA violations, a plan participant or beneficiary must show that the violation caused injury, but need show only actual harm and causation, not detrimental reliance.
The decision isn’t the easiest to go through for a snap judgment and the implications for employers so I’m going to take some time to review it further and comment as appropriate.
(As I’ve disclosed before, while I have no involvement in the matter, I do know one of the named plaintiffs in the case. )
Picture: The original U.S. Supreme Court in Philadelphia, PA