On our sister blog – Employer Law Report – we recently blogged about an infrequent ERISA surprise from the US Supreme Court, in CIGNA v. Amara, and now we have a second ruling from the Supreme Court in that case, granting Amara certioria and remanding. This is a procedural twist that is more interesting to lawyers than employers, but it underscores the point we made about uncertainty in this area: we don’t really know what remedies are other “appropriate equitable relief” under ERISA, or know how much exposure employers face regarding their ERISA plans. Establishing procedures for compliance with ERISA’s disclosure and other requirements is essential to limiting exposure in an uncertain environment.
The specific issues in this case involved summary plan description materials and ERISA Section 204(h) notices that were provided to participants when CIGNA’s traditional defined benefit plan accruals were frozen, and the plan was converted to a cash balance plan. The district court found that these materials failed to adequately describe “wear-away,” during which certain participants would not accrue new benefits.
For those who are interested in the details, the Supreme Court’s first decision was based on CIGNA’s request (petition for certioria) and the issues that CIGNA raised. Since the Supreme Court ruled in CIGNA’s favor on those issues, that left us a bit confused about why the Supreme Court traveled through time to analyze very old law on issues not raised by CIGNA, and what the court was supposed to do on remand. But after issuing that decision, the Supreme Court has now granted Amara’s petition for certioria, and remanded without writing an opinion. The Second Circuit did not write an opinion, either, and will presumably send the case back to the district court. This places the district court in the difficult position of considering issues that were not argued at the Supreme Court, without much binding authority. The court will need to consider whether 502(a)(3) provides a remedy where a summary of material modifications incorrectly stated that cash balance benefits were comparable to traditional benefits, and whether (under a complicated set of facts and regulation changes) 502(a)(3) allows for reformation of plan terms to the traditional benefit formula.
We mentioned in our prior blog that the Supreme Court, in a majority opinion, engaged in dicta (nonbinding discussion) about remedies that constitute appropriate equitable relief under 502(a)(3). But appropriate equitable relief under 502(a)(3) was not an issue raised by CIGNA and the parties did not have the opportunity to brief this issue, and we believe the discussion left open many questions.