A Flaw in ERISA’s Remedial Scheme: How Do Benefit Plans Recoup Money from Overpaid Participants?

Abstract

Consider the following scenario: an ERISA plan erroneously distributes greater retirement benefits to its members than the participants and beneficiaries are actually entitled to receive — either because the plan errs when calculating benefits, or a participant induces the plan to distribute non-vested funds through misrepresentation. This article investigates the remedies available to plaintiff-plans seeking recovery for overpayments to participants. Based on the Supreme Court's recent ERISA remedies rulings, the article discusses whether the statute contains a viable cause of action for fiduciaries to recover mistaken overpayments from participants. Following a brief history of ERISA, including the statute's purpose and foundation in trust law, this article examines the Supreme Court’s construction of Section 502(a) and its test for appropriate equitable relief. The article then analyzes and compares recent cases denying monetary recovery to plan fiduciaries to those cases allowing fiduciaries to recoup overpayments to participants. Ultimately, the article's analysis illustrates that the Supreme Court's overly-narrow interpretation of ERISA’s remedial provisions frustrates the purpose of the statute.