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Compliance December 6, 2004
Supreme Court Declines to Hear Case on Terminated Benefits
December 6, 2004 (PLANSPONSOR.com) - The Supreme
Court declined on Monday to hear a case that would have
helped clarify standards that relate to suing an employer who
rescinds health benefits that were initially promised in
early retirement packages.
Reported by Kip McDaniel
The case that the Court declined to hear relates to The Continental Insurance Company, which in 1991 offered an early retirement package that was accepted by 347 employees. Included in this package was a Health Care Allowance (HCA) that was positioned as a “lifetime” welfare benefit. In 1995, Continental was acquired by CNA Financial Corporation (CNA) and in 1998, CNA notified the early retirees that as of January 1, 1999, their HCA benefit would be terminated.
After the move to mitigate benefits, a group of early retirees sued CNA. In the suit, they alleged claims of wrongful denial of benefits under the Employee Retirement Income Security Act (ERISA), breach of contract, estoppel and a breach of fiduciary duty.
Several lower courts have since ruled that the company could be held liable for not fully revealing that the benefits could be eliminated, according to the Associated Press (AP). However, the US 7 th Circuit Court of Appeals ruled in July that companies can be held liable only if there was intent to deceive (See Termination of ‘Lifetime’ Benefits Is Not a Fiduciary Breach ).
The case is Vallone v. CNA Fin. Corp., 7th Circuit Court of Appeals .