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Supreme Court rules on benefit overpayments


The Supreme Court on Wednesday limited benefit plan executives' ability to recover overpayments.

The benefit case, Montanile vs. Board of Trustees of the National Elevator Industry Health Benefit Plan, centered on whether the Employee Retirement Income Security Act's detailed set of remedies would allow plans to recover overpayments when a participant spends the assets in question. In the 8-1 decision, Justice Clarence Thomas writing for the majority said plan fiduciaries cannot go after other assets because they are not considered equitable relief.

While the case involved specific circumstances, attorney Nancy Ross, a partner at Mayer Brown L.L.P., predicts the decision will be applied more broadly to retirement plans as well. “The issue comes down to, what did Congress mean when it said equitable relief? It remains to be seen how broad of an application this will be given,” Ms. Ross said. If fiduciaries are prevented from recovering assets, it could also increase the potential for fiduciary breach lawsuits, she added.

AARP supported Robert Montanile in an amicus brief that said “requests for repayment of overpayments of these benefits can be devastating to participants' retirement security.”

Hazel Bradford writes for Pensions & Investments, a sister publication of Business Insurance.