As we mentioned in our recent post regarding the Sixth Circuit’s decision in Tullis v. UMB Bank, the U. S. Supreme Court agreed to resolve a circuit split regarding the viability of ERISA lawsuits that seek damages for individual – as opposed to plan – injuries. Just yesterday, the Court issued its ruling and, in so doing, endorsed the approach taken by the Sixth Circuit in Tullis.
In particular, the Court ruled in LaRue v. DeWollf, Boberg & Assoc., Inc. that, although ERISA Section 502(a)(2) does not provide a remedy for individual injuries distinct from plan injuries, that provision does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account. In reaching this decision, the Court needed to reconcile its 1985 holding in Massachusetts Mutual Life Ins. Co. v. Russell – i.e. that a disability plan participant entitled to a specified benefit could not bring suit under 502(a)(2) to recover consequential damages arising from delay in processing her claim. In doing so, the Court noted that the "landscape has changed." Specifically, the Court explained that individual participant account balance plans have become prevalent and, regardless of whether a fiduciary breach diminishes plan assets payable to all participants or only to a particular individual account, such a breach creates the kind of harm that concerned the draftsmen of ERISA’s fiduciary breach provisions.