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.
In the recent Pearce v. Chrysler Grp., LLC Pension Plan case, a Chrysler Group retiree attempted to make such an argument regarding his claim for a subsidized early retirement benefit. The retiree alleged that he thought he would be eligible for the early retirement benefit when he terminated employment, based on the description of the benefit in the SPD. The claim reviewer determined that the retiree was not eligible for the early retirement benefit under the terms of the plan.
The plaintiff then filed a suit for additional benefits. After the Supreme Court’s Amara decision, the plaintiff attempted to amend his complaint to seek equitable remedies under ERISA § 502(a)(3). The district court denied the plaintiff’s motion to amend and dismissed the complaint on the ground that the terms of the plan were so clear on the subject that alleging otherwise would be futile. The plaintiff appealed to the Sixth Circuit.
In June, the Sixth Circuit held in an unpublished opinion that the retiree should have been allowed to seek a claim for equitable relief under ERISA § 502(a)(3), even though the terms of the plan clearly denied the plaintiff the subsidized early retirement benefit he sought. Pearce v. Chrysler Grp., LLC Pension Plan, No. 13-2374 (6th Cir. June 18, 2015). While acknowledging that “each detail” of a plan is not required to be included in an SPD, the court held that “material limitations” on a participant’s rights must be included. The court noted that the addition of a “single sentence” to the SPD would have prevented the discrepancy. But perhaps most startlingly, the court said that, for purposes of a § 502(a)(3) claim, it is “irrelevant” what the plan says: all that appears to matter is that the SPD says something different.
Although it is disturbing for a court to say so plainly that the terms of a plan are irrelevant, the court might not have meant for the statement to be as sweeping as it sounds. This was, after all, an appeal about whether the plaintiff should have been able to bring an equitable remedies claim under § 502(a)(3), and not a judgment on the merits of the underlying claim. However, this decision demonstrates that courts are ever more willing to hear these cases, and to give plaintiffs the benefit of the doubt at the early stages of litigation.
These developments place even more importance on limiting the plan’s exposure to these suits by careful drafting of SPDs. Plan administrators are in a difficult position. On the one hand, they are supposed to “summarize” plans in a way that is understandable for the plan participant but does not overwhelm the participant with information; on the other hand, the developing case law appears to be pushing plan administrators to err on the side of being overly inclusive. It is entirely possible that, in the future, SPDs will be longer than the plan documents they summarize. But for now, although it is not clear how much detail must appear in the SPD, plan administrators should, at a minimum, review SPDs regularly to make sure that the descriptions provided remain accurate and are not misleading.