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Commentary Great West v. Knudson

Commentary Great West v. Knudson

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Published by Ed Clinton
Commentary on a Supreme Court decision on the ERISA law.
Commentary on a Supreme Court decision on the ERISA law.

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Published by: Ed Clinton on Jan 28, 2010
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01/15/2012

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 A Commentary on Great West Life & Annuity Co. v. Knudson, And ERISA Section 502(a)(3)
ByEdward X. Clinton, Jr.Copyright 2004In Great West Life & Annuity Co. v. Knudson, 122 S.Ct.708 (1/08/2002), the Supreme Court held that Section 502(a)(3) of the Employee Retirement Income Security Act(“ERISA”) does not authorize an award of compensatorydamages. This decision, the third in a line of SupremeCourt decisions on the relief authorized by Section 502(a)(3), has important implications for much of the ERISAjurisprudence. As we shall see, the Great West decisionwill (1) prevent some plaintiffs from obtaining moneydamages for violations of ERISA; (2) prevent health plansfrom recovering the costs they incurred on behalf ofcertain injured insureds.Congress enacted the Employee Retirement IncomeSecurity Act, (“ERISA”)
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to protect the rights ofparticipants in company-sponsored and multi-employerretirement plans. ERISA contains numerous requirements foremployer-sponsored retirement plans. The act also containsenforcement provisions in § 502 that allow a beneficiary tobring a lawsuit to obtain benefits or challenge otheradverse decisions of plan administrators. Section 502(a)
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The Act’s title is the Employee Retirement Income Security Act of1974, P.L. 93-406.
 
(1)(B) allows a plan participant or beneficiary to bring anaction “to recover benefits due to him under the terms ofthis plan, to enforce his rights under the terms of theplan, or to clarify his rights to future benefits under theterms of the plan.”
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This section limits the beneficiary torecovering benefits he is entitled to under the terms ofthe plan. The plan documents will determine the outcome ofthe lawsuit. What happens if a plan administrator misleadsthe beneficiary as to the terms of the plan? Section502(a)(1) provides no remedy because any recovery islimited to the terms of the plan documents. Similarly,section 502(a)(2) does not allow individual beneficiariesto sue for a remedy.
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Section 502(a)(3) allows a participant, beneficiary,or fiduciary “(A) to enjoin any act or practice whichviolates any provision of this title or the terms of theplan, or (B) to obtain other appropriate equitable relief(i) to redress such violations or (ii) to enforce anyprovision of this title or the terms of the plan.”
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Thekey question raised by § 502(a)(3) is what type of relief
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§ 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).
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See Strom v. Goldman Sachs, 202 F.3d 138 (2d Cir. 1999)(“Plaintiffcannot sue under section 502(a)(1)(B) because there are no benefits dueher under the plan. She cannot proceed under section 502(a)(2) becauseit affords no remedies to individual beneficiaries.”).
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ERISA § 502(a)(3).
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is permitted by the phrase “other appropriate equitablerelief to redress such violations.”
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This commentary will discuss ERISA’s civil recoveryprovisions, the relief provided to civil litigants bySection 502, the debate surrounding Section 502(a)(3) andthe Supreme Court’s resolution of that debate in GreatWest. The article will also discuss various commentators’views of Section 502(a)(3).
I.
ERISA’s Civil Recovery Provisions
A.
The Fiduciary Standard ERISA contains numerous provisions regulating theconduct of plan fiduciaries. Section 404(a) is the mostimportant provision regulating fiduciary conduct. Itrequires that a fiduciary:shall discharge his duties with respect to a plansolely in the interest of the participants andbeneficiaries, and(A) for the exclusive purpose of: (i) providingbenefits to participants and their beneficiaries; and(ii) defraying reasonable expenses of administeringthe plan;(B) with the care, skill, prudence, and diligenceunder the circumstances then prevailing that a prudentman acting in a like capacity and familiar with suchmatters would use in the conduct of an enterprise of alike character and with like aims;
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Id.
 
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