534 U.S. 204 (U.S. Supreme Court 2002)
Great-West Life & Annuity Ins. Co.
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.
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.