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09-804 CIGNA CORP. V. AMARA DECISION BELOW: 348 Fed.Appx. 627 JUSTICE SOTOMAYOR TOOK NO PART. CERT. GRANTED 6/28/2010 QUESTION PRESENTED: Whether a showing of "likely harm" is sufficient to entitle participants in or beneficiaries of an ERISA plan to recover benefits based on an alleged inconsistency between the explanation of benefits in the Summary Plan Description or similar disclosure and the terms of the plan itself. LOWER COURT CASE NUMBER: 08-3388, 08-3460
In the case of CIGNA Corporation v. Janice C. Amara, et al., the Supreme Court ruled in 2011 that a group of employees could sue their employer for providing misleading information about changes to their pension plan under ERISA (Employee Retirement Income Security Act). The company had switched from a traditional defined benefit plan to a cash balance plan and allegedly misrepresented how this change would affect employees' benefits. The court found that while Section 502(a)(1)(B) of ERISA does not provide an appropriate remedy for these misrepresentations, another provision - Section 502(a)(3) - may allow relief by authorizing "appropriate equitable relief" for acts or practices which violate the terms of the plan or ERISA itself. This ruling allowed plaintiffs to potentially recover losses resulting from their reliance on inaccurate information provided by employers regarding retirement plans.
In the dissenting opinion for the case CIGNA Corporation v. Janice C. Amara, Justice Scalia argued that the majority's decision to allow a reformation remedy under ERISA Section 502(a)(3) was incorrect and unsupported by precedent or statutory text. He contended that this section of ERISA only allows equitable relief in cases where there is actual harm or loss suffered due to fiduciary breach, not simply when misleading information has been provided by an employer about benefits plans. Furthermore, he disagreed with the majority's interpretation of "appropriate equitable relief", arguing it should be limited to traditional forms of equity such as injunctions and restitution rather than expanded to include reformations which fundamentally alter contract terms without mutual consent from both parties involved.