Supreme Court orders new hearing on employee benefits claim
Supreme Court orders new hearing on employee benefits claim
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[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] Monday in CIGNA Corp v. Amara [Cornell LII backgrounder; JURIST report] that a district court incorrectly ordered relief under the Employee Retirement Income Security Act (ERISA) [materials]. The court had been asked to determine what “showing” is required to entitle participants in the pension plan to recover benefits where there has been an alleged inconsistency between the explanation of benefits and the terms of the plan. The US Court of Appeals for the Second Circuit applied a “likely harm” standard when affirming the district court’s ruling that plaintiffs were entitled to additional benefits. The Supreme Court found that the district court was not authorized to grant relief under ERISA’s recovery-of-benefits-due provision but that a different provision authorized similar relief, remanding the case to the district court for reconsideration. Justin Stephen Breyer wrote for the majority:

The upshot is that we can agree with CIGNA only to a limited extent. We believe that, to obtain relief by surcharge for violations of §§102(a) and 104(b), a plan participant or beneficiary must show that the violation injured him or her. But to do so, he or she need only show harm and causation. Although it is not always necessary to meet the more rigorous standard implicit in the words “detrimental reliance,” actual harm must be shown.

We are not asked to reassess the evidence. And we are not asked about the other prerequisites for relief. We are asked about the standard of prejudice. And we conclude that the standard of prejudice must be borrowed from equitable principles, as modified by the obligations and injuries identified by ERISA itself. Information-related circumstances, violations, and injuries are potentially too various in nature to insist that harm must always meet that more vigorous “detrimental harm” standard when equity imposed no such strict requirement.

Justice Antonin Scalia filed an an opinion concurring in the judgment. Justice Sonia Sotomayor took no part in the decision.

The circuit courts have been deeply divided over the issue of what standard to apply, with some requiring a showing of prejudice or reliance in order to recover benefits and others only requiring a discrepancy between the explanation of benefits and the terms of the plan. The Second Circuit has been the only circuit to apply the “likely harm” standard.