111 A.3d 204
Pa. Super. Ct.2015Background
- In 1998 CIGNA converted its defined‑benefit pension plan to a cash‑balance plan and issued disclosures that represented benefits would not be reduced, though a "wear away" effect could reduce some participants’ accruals.
- CIGNA withheld comparative documentation and allegedly discouraged benefits comparisons, which plaintiffs said concealed the wear‑away risk.
- A class action (Amara) alleged ERISA violations for misleading summary plan descriptions and notices; the district court found the disclosures were misleading and ordered reformation of the plan.
- On remand and review, federal courts (including the Second Circuit and the Supreme Court on remedies law) addressed the appropriate equitable relief; the district court found CIGNA’s conduct constituted fraud or similarly inequitable conduct.
- CIGNA sought a declaratory judgment that its fiduciary‑liability insurance (an excess policy following a Lloyd’s primary policy) covered the Amara liability; excess insurers denied coverage citing a policy exclusion for “deliberately fraudulent or criminal acts or omissions.”
- The Pennsylvania trial court granted summary judgment for the insurers, applying the deliberately‑fraudulent‑acts exclusion; CIGNA appealed and the Superior Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the insurer’s "deliberately fraudulent acts" exclusion bars coverage for CIGNA’s conduct | CIGNA: wrongful‑acts coverage includes misstatements/omissions; no specific exclusion for intentional misrepresentations, so coverage applies | Insurers: the exclusion is a carve‑out to wrongful‑acts coverage and bars coverage for deliberately fraudulent or criminal acts | Held: exclusion applies; Amara courts found fraud, and policy must be read in full so exclusion defeats coverage |
| Whether the federal courts’ finding of fraud was non‑final or dictum (so insufficient to trigger exclusion) | CIGNA: the fraud language was non‑final or dictum and coupled with references to "inequitable conduct," so not a final adjudication of fraud | Insurers: federal findings of fraud (and affirmance) are definitive and sufficient; final unless reversed | Held: federal findings were integral to remedy and affirmed; they constitute a final determination for preclusion purposes |
| Whether public policy forbids insurers from excluding intentional acts (affecting enforceability of exclusion) | CIGNA: there is no blanket rule against insuring intentional acts; exclusion should not apply categorically | Insurers: Pennsylvania public policy prohibits insurance coverage for intentional torts; exclusions enforceable | Held: Pennsylvania law bars indemnification for intentional acts; no exception here |
| Whether the trial court abused discretion or misapplied law in granting summary judgment | CIGNA: disputes legal application and characterization of federal findings; procedural/waiver arguments | Insurers: record and legal standards support summary judgment; CIGNA failed to show material factual dispute | Held: No abuse of discretion or error of law; summary judgment affirmed |
Key Cases Cited
- Amara v. CIGNA Corp., 534 F. Supp. 2d 288 (D. Conn. 2008) (district court liability opinion finding misleading ERISA disclosures)
- Amara v. CIGNA Corp., 559 F. Supp. 2d 192 (D. Conn. 2008) (district court ordering reformation as remedial relief)
- Amara v. CIGNA Corp., 925 F. Supp. 2d 242 (D. Conn. 2012) (district court finding CIGNA engaged in fraud or similarly inequitable conduct)
- CIGNA Corp. v. Amara, 131 S. Ct. 1866 (U.S. 2011) (Supreme Court addressing correct ERISA remedy framework)
- State Farm Mut. Auto. Ins. Co. v. Martin, 660 A.2d 66 (Pa. Super. 1995) (Pennsylvania public policy disfavors insurance coverage for intentional acts)
- Commonwealth v. Riding, 68 A.3d 990 (Pa. Super. 2013) (definition of fraud as false representation knowing it false with intent to deceive)