Misleading Summary Plan Descriptions and the Supreme Court

I have been keeping my eye out for an article on the CIGNA Corp. v. Amara case before the Supreme Court - argued a little over a week ago - that focuses more on the practical realities of the case for plan sponsors and participants, rather than on the “inside baseball” analysis of the lawyers and their arguments, which were all the rage in the immediate aftermath of the argument before the high court. I think I finally found it here, in this piece from CFO.com. I have to say that my view of the case, the arguments, and the analysis about it floating around out there have me perpetually in an “on the one hand, on the other hand” mindset about the case, which of course - as someone paid by people to give them definitive advice on which they can actually act - makes me think of Harry Truman’s famous line that he wanted a one-armed economic advisor, because when asked for his opinion he wouldn’t be able to tell the president on the one hand this, and on the other hand that.

As the CFO article points out, the central practical question here is the impact of potentially misleading or, more innocuously, simply incorrect summary plan descriptions, ones that do not accurately state the terms of a plan itself. As the CFO article points out, allowing the SPD to govern or at least alter the benefits by operation of its variance from the actual plan terms - something which in this instance could cost the plan sponsor $70 million or so - can result in a large, unfunded expense and a benefit plan of a scale a company never intended to offer. That really isn’t and was never the point of ERISA, which was to encourage companies to offer benefit plans; whacking them for mistakes, particularly if innocent, isn’t really consistent with that, nor is it likely to encourage companies to offer benefit plans. On the other hand, just off the top of my head, I have at least two or three cases sitting on my desk right now that revolve around inaccurate or misleading SPDs or other information provided to plan participants, ones that simply did not conform with the governing plan documents themselves. It seems to me that, particularly with plan terms as significant as the ones at issue in Cigna, there really is no reason why an emphasis should not have been put in the first place on making sure that the relevant plan term was communicated accurately and succinctly in the SPD. And that of course brings us all the way around again to one of the obsessive focuses of this blog - that the best way to avoid liability, lawsuits and litigation costs is an obsessive focus on compliance and operational competency in the day to day running of a plan. More - in my experience - than in any other area of the law, when it comes to ERISA governed benefit plans, an ounce of prevention is worth a pound of cure.