amara

The U.S. Court of Appeals for the Sixth Circuit recently affirmed the crucial importance of accurate plan summaries in the post-Amara world. To date, part of the legacy of CIGNA v. Amara has been an uptick of cases in which ERISA plaintiffs allege a material mismatch between a plan document and a summary plan description (“SPD”). Plaintiffs petition the court to use the broad equitable remedies available under ERISA § 502(a)(3) after Amara to reform the plan document to reflect the interpretation the plaintiff favors—even if the plan’s terms on the subject were crystal clear.
Continue Reading Reformation Claim May Proceed Despite Clear Plan Terms, Sixth Circuit Holds

What happens when a plan participant seeks benefits that he or she claims are set forth in a summary plan description (“SPD”) but are found nowhere in the plan itself?  On one level, the Supreme Court in Cigna Corp v. Amara answered this question decisively:  SPDs and other written disclosures about the plan do not constitute terms of the plan and cannot modify the plan’s terms.  Accordingly, participants cannot claim under ERISA Section 502(a)(1)(B) that they are entitled to benefits under the plan based on statements that appear only in the SPD.

However, the Supreme Court also stated that a participant could obtain “appropriate equitable relief” under ERISA Section 502(a)(3) for statutory disclosure violations.  The Supreme Court identified three possible equitable remedies:  reformation, estoppel, and surcharge.  Although the Supreme Court made clear that the traditional requirements in equity for obtaining any such relief must be satisfied, it left to the district court the task of determining when such remedies are appropriate.
Continue Reading Amara Decision Affirms Broad Equitable Remedy for Inaccurate SPD

A recent Ninth Circuit decision, Gabriel v. Alaska Elec. Pension Fund, offers useful insight for deciding how to fix a pension overpayment.

Virtually every employer that administers a pension plan has experienced (or will experience) discovering a calculation error after incorrect payments have been made for several years–resulting in thousands of dollars of overpayments.  Fixing these overpayments is often difficult.  On the one hand, plan fiduciaries have an obligation to stop overpayments and restore losses from excess payments.  IRS guidance instructs plan administrators to recover overpayments from the affected participants.  On the other hand, participants who have received overpayments inevitably claim that they have relied on the incorrect benefit and that correcting the error would result in undue harm to them.  The affected participants often recognize that an incorrect benefit cannot be paid by the plan, but they argue that the cost of the correction should be borne by the administrator who made the error, rather than by the affected participant.

Since the Supreme Court’s 2011 decision in Cigna Corp. v. Amara (and even before that decision), many participants who received overpayments have alleged that an equitable remedy like “reformation,” “equitable estoppel,” or “surcharge” entitles them to keep overpayments.Continue Reading Judges Disagree on Remedies for Pension Mistake