What's Wrong With This Picture?
In LaRue v. DeWolff, Boberg & Assoc., 450 F.3d 570 (4th Cir. 2006) and the follow up opinion in the same case at 458 F.3d 359 (4th Cir. 2006) denying rehearing, the U.S. Court of Appeals for the Fourth Circuit discusses at length ERISA’s remedies. The case involves a pension plan participant who directed the plan fiduciary to invest LaRue’s pension money in a particular investment. The fiduciary failed to do so. As a result LaRue lost out on earning $150,000.
The Fourth Circuit affirmed the trial court, ruling that Mr. LaRue has no ability to obtain any portion of those lost profits from the fiduciary. According to the court, ERISA simply does not allow ERISA plan participants and beneficiaries to receive any money for breach of fiduciary duty unless it is accompanied by a violation of the terms of the ERISA plan. The Fourth Circuit is no aberration. Most courts agree that even when an ERISA fiduciary’s wrongful act leads directly to financial loss for a plan participant, unless there is a violation of the terms of the ERISA plan itself, the statute bars the participant from recovering that loss from anyone. The individual is simply left uncompensated.
But here’s what really strikes me as Orwellian about the decision. In the denial of rehearing the Fourth Circuit characterizes the statute's remedies as “fair and generous.” I’m sure Mr. LaRue would use different words to describe ERISA’s treatment of his case.