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Cigna Can’t Shake Pension Class Action

MANHATTAN (CN) - Echoing its ruling of five years ago, the 2nd Circuit on Tuesday affirmed a decision reforming Cigna's pension policy and maintaining class action certification for 27,000 of its workers, possibly spelling a new Supreme Court battle in a longstanding case.

Cigna changed its pension plan in 1998 a defined annual contribution policy to a cash benefit system. Workers challenged the shift three years later in a federal class action in the insurance company's home state of Connecticut.

In a 50-page opinion on Tuesday, U.S. Circuit Judge Debra Ann Livingston untangled the evolution of Cigna's pension plan by referring to the older version as "Plan A" and the newer one as "Plan B."

Seven years into the case, U.S. District Judge Janet Arterton found at trial that Cigna provided insufficient notice that Plan B would significantly reduce the rate of benefit accrual.

Ruling that this violated federal labor law, Arterton ordered Cigna to provide "A+B" benefits to its workers.

In 2009, the 2nd Circuit upheld that initial order, but the Supreme Court overturned both of the lower court rulings two years later.

Writing for the majority, Justice Stephen Breyer found that the district court's relief was inappropriate under the part of the Employee Retirement Income Security Act (ERISA) that the decision cited, Section 502(a)(1)(B).

Breyer added, however, that Arterton could consider whether another section of ERISA - Section 502(a)(3) - offered similar relief.

This led Arterton and the 2nd Circuit to put their stamp on similar relief on remand.

Ordering a "Plan A+B" hybrid was appropriate because of Cigna's "materially misleading notices," Livingston wrote on Tuesday.

"Facing these obstacles to a smooth transition to Part B, CIGNA 'sought to negate the risk of backlash by producing affirmatively and materially misleading notices,' the three-judge panel concluded.

"CIGNA's misrepresentations achieved the desired result: defendants have not pointed to evidence that any employee understood the ways in which Part A benefits were reduced as a result of the plan conversion or provided testimony from even a single employee stating that he or she understood that the new plan could cause wear away," the opinion states. "We can discern no error, moreover, in the district court's inference that informed employees, aware that their pension benefits were less valuable, would have protested the change, requested a higher salary, filed a lawsuit, or left for another employer."

The 2nd Circuit upheld Arterton's refusal to decertify the class, or revert Cigna's pensions to the old plan.

Circuit Judges Dennis Jacobs and Gerard Lynch concurred.

Attorneys for Cigna and the workers did not respond to a request for comment.

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