Respondent Knudson, a beneficiary under an ERISA-governed health plan administered by Great-West, was severely injured in an automobile accident. Pursuant to a plan provision requiring reimbursement from any recovery from third parties, Great-West paid substantial medical expenses on Knudson's behalf (over $400,000). Knudson later sued the automobile manufacturer and others and reached a global settlement of approximately $650,000. Under the settlement and a state-court order, most of the settlement proceeds were directed to entities other than Knudson personally, including payment to a court-created Special Needs Trust for Knudson's ongoing care, payments to her attorneys, and other obligations; only a relatively small amount was designated toward reimbursing Great-West. Great-West did not receive the bulk of the funds and the proceeds were not placed in Knudson's personal possession. Great-West then filed suit in federal court under ERISA § 502(a)(3), seeking to enforce the plan's reimbursement provision by obtaining the balance of what it had paid in medical expenses. The district court denied relief, the Ninth Circuit affirmed, and Great-West sought review in the Supreme Court.
Does ERISA § 502(a)(3) authorize a plan fiduciary to obtain monetary reimbursement from a beneficiary's general assets to enforce a plan's reimbursement provision where the settlement funds are not in the beneficiary's possession and thus cannot be targeted by an equitable lien or constructive trust on specifically identifiable property?
ERISA § 502(a)(3) permits a fiduciary to obtain only "appropriate equitable relief" to redress violations of, or enforce, the terms of the plan. This includes traditional equitable remedies, such as injunctions and forms of equitable restitution (e.g., constructive trusts or equitable liens) imposed on particular funds or property in the defendant's possession that can be specifically identified and traced. It does not permit legal remedies such as personal money judgments imposing liability to pay a sum of money from the defendant's general assets.
No. Because the settlement proceeds that Great-West sought were not in Knudson's possession and could not be identified and traced as particular funds subject to a constructive trust or equitable lien, Great-West sought legal, not equitable, relief. ERISA § 502(a)(3) does not authorize such legal relief.
The Court emphasized that the statutory phrase "appropriate equitable relief" refers to categories of relief traditionally available in equity, not to whatever relief a court of equity might provide in the abstract. Relying on its earlier decision in Mertens v. Hewitt Associates, the Court distinguished legal restitution (a personal claim for money) from equitable restitution (a claim to specific property or funds). Equitable restitution requires that the plaintiff seek to recover particular, specifically identifiable funds in the defendant's possession that can be traced; in such circumstances, equity could impose a constructive trust or equitable lien on the res. Here, the settlement funds had been distributed pursuant to a state-court order primarily to a Special Needs Trust and other recipients; they were not in Knudson's hands or control. As a result, Great-West's suit effectively sought to impose personal liability on Knudson to pay money from her general assets—the hallmark of legal, not equitable, relief. The Court rejected the argument that simply labeling the requested relief as "restitution" makes it equitable. The character of the relief turns on the nature of the remedy sought and the historical practice of equity courts, not on the label used by the parties. The plan's subrogation/reimbursement clause did not transform the remedy into an equitable lien because the targeted funds were no longer possessed by Knudson and were not otherwise subject to a lien enforceable against her general assets. The Court also noted that although a fiduciary might be able to obtain equitable relief by, for example, enjoining disbursement or asserting a lien against specific funds before they leave the beneficiary's possession, those circumstances were not present. Accordingly, § 502(a)(3) did not provide a vehicle for Great-West's requested recovery.
Knudson is a cornerstone ERISA remedies case that narrows the scope of relief available to plan fiduciaries under § 502(a)(3). It teaches that reimbursement and subrogation claims must be framed as equitable restitution aimed at specific, identifiable funds in the beneficiary's possession; otherwise, the claim is an impermissible bid for legal damages. The case also provides an indispensable primer on the legal-versus-equitable restitution distinction. Subsequent decisions built on this framework. In Sereboff v. Mid Atlantic (2006), the Court upheld enforcement of an equitable lien by agreement when the plan identified a specific fund in the beneficiaries' possession, distinguishing Knudson on the possession/identifiability axis. In Montanile v. Board of Trustees (2016), the Court held that if specifically identifiable settlement funds are dissipated on nontraceable items, a fiduciary cannot recover from a beneficiary's general assets—again confirming Knudson's core principle that possession and traceability are dispositive. For practitioners and students, Knudson underscores the need for prompt, strategic action to secure identifiable funds and for precise drafting of plan language to facilitate equitable remedies.
Great-West Life v. Knudson anchors ERISA's civil-enforcement scheme to historically grounded equitable principles. By holding that § 502(a)(3) allows only traditional equitable remedies—such as constructive trusts or equitable liens on identifiable funds in a beneficiary's possession—the Court closed the door to routine money judgments against beneficiaries under the guise of restitution.