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Hybrid Recommendations Submitted to Treasury and IRS

September 27, 2011

Earlier this month, the Coalition partnered with several key trade associations to submit a critical recommendations summary to the Internal Revenue Service (IRS) and the Treasury Department. The summary records and expands on concerns the Coalition raised during meetings with IRS and Treasury Department representatives held in April and May.

In addition, several appellate courts have ruled on hybrid plan cases since our last update. Generally, the opinions held in favor of the plans, denying the age discrimination claims under ADEA and ERISA affirming the district court’s decision dismissing the Petitioners’ claims on the grounds that “treating the time value of money as a form of discrimination is not sensible.”

In Engers v. AT&T, the Third Circuit affirmed the district court’s summary judgment for AT&T on all of the ADEA and ERISA claims against AT&T and, specifically, concluded that the plaintiffs’ age discrimination “wear-away” claims are barred by the plain language of ADEA. Engers v. AT&T, Inc., No. 10-2752, 2011 WL 2507089 (Ct. Apps. 3d Cir., June 22, 2011).

Aside from the age discrimination claims, Cigna Corporation v. Amara reached the Supreme Court on the issue of what weight a court should give to a summary plan document (SPD) that materially contradicts a plan instrument. The Court concluded that an SPD is not part of an ERISA plan and, thus, may not be used to bring a claim under ERISA section 502(a)(1)(B) and could not grant the district court the power to reform the plan. The Court also concluded that any inconsistencies between an SPD and a plan may support claims for other appropriate equitable relief under ERISA section 502(a)(3) and may potentially support monetary remedies. Justices Scalia and Thomas concurred only with respect to the conclusion that an SPD is not a plan instrument and is not enforceable under ERISA section 502(a)(1)(B). CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011).

For questions, please contact Derek Dorn of Davis & Harman ( or 202-662-2290).