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Legal Update

US Supreme Court Grants Certiorari in CIGNA Corp. v. Amara

29 June 2010
Mayer Brown Legal Update

The Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., seeks to ensure that individuals receive accurate and understandable information regarding their rights and obligations under employee benefit plans. To this end, ERISA requires plan administrators to provide all plan participants with a “summary plan description” (SPD), as well as a “summary of material modifications” (SMM) when material changes are made to the plan. On June 28, 2010, the Supreme Court granted certiorari in CIGNA Corp. v. Amara, No. 09-804, to determine what plan beneficiaries must demonstrate in order to recover benefits when suing based on alleged inconsistencies between the plan’s terms and an SPD.

This case is important for the large number of employers who currently maintain—or plan to create—benefit plans for their employees. The Court’s decision could increase the costs, complexities, and liabilities associated with creating, maintaining, and amending plans.

The case arises out of changes to an ERISA plan established by CIGNA. Plan beneficiaries sued, contending that company had failed to adequately disclose certain terms of the modified plan in its SPDs. In the decision below, the Second Circuit summarily affirmed the trial court’s use of a “likely harm” standard, according to which beneficiaries can recover if “a plan participant or beneficiary was likely to have been harmed as a result of a deficient SPD.” This standard conflicts with the standards adopted by other circuits. In the First, Fourth, Seventh, Eighth, Tenth, and Eleventh Circuits, a plan beneficiary suing based on a discrepancy between an SPD and the actual terms of the plan must demonstrate some degree of reliance or prejudice in order to recover. In the Third, Fifth, and Sixth Circuits, by contrast, a plan beneficiary may recover when there is a “clear and material conflict” between the SPD and the plan, whether or not the beneficiary can demonstrate reliance on the SPD or prejudice from the conflict.

Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 19, 2010, and amicus briefs in support of the respondents will be due on September 20, 2010.

Learn more about Mayer Brown’s Employment and Supreme Court & Appellate practices.

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