Supreme Court will Decide Issue on Pension Changes

Posted by marykeating on July 15, 2010 under Employment benefit issues | Be the First to Comment

The Supreme Court will decide an important issue in employee benefits in its next term. Under the federal law that governs employee benefits (ERISA), employees are entitled to get a copy of a summary plan description as well as notification of any important changes to the plan. The summary plan descriptions almost always state that the actual “plan” governs in cases of any differences in language. Although participants in the plan are entitled to obtain the full document upon request, they are not routinely given out without the request. Because pension plan document can easily run more than 100 pages, there are critical differences in language in plenty of cases. The plan amendments are even more difficult to comprehend, sometimes, since they can’t be understood without sitting down with the plan document itself to know how a change to Article IX might affect an employee’s entitlement to disability benefits, for example.

The Supreme Court took this case for a typical reason: different federal circuit courts of appeals used different standards to decide when employees may sue over the discrepancy between the summary plan description and the language of the longer plan. In the case before the Supreme Court, employees charged that CIGNA changed the pension plan, telling employees that it had “enhanced” the plan; in reality, the future benefits available upon retirement would be less favorable. The trial court found that by spinning its communications, CIGNA “wished to avoid the employee backlash likely to result from a thorough discussion of these aspects” of its changes to the plan. Still, the District Court concluded that it could not force the plan to reinstate the old benefits. The employees ask the Supreme Court to make clear that the trial courts are free to provide meaningful remedies for violation of the law.