A recent decision involving a suit over investment actions of a defined benefit plan illustrates one of the reasons why participants in a DB plan cannot sue plan actuaries for mistakes — the participants have almost never been damaged. DB plan participants have a right to a fixed set of benefits, and how well the plan does on its investments or meeting its actuarial assumptions does not increase or decrease that set of benefits:
As the US District Court for the Western District of Washington recently stated in Palmason_v_Weyerhaeuser_Company
Misconduct by the administrators of a defined benefit plan will generally have no effect on an individual's payments under the plan. In order to establish the requisite personal injury to pursue an award of monetary damages, the participants in such a plan must show that the alleged breaches of fiduciary duty created an appreciable risk that the defined benefits would not be paid. In other words, plaintiffs must show that the challenged investment policy and other fiduciary breaches "create[d] or enhance[d] the risk of default by the entire plan."
In other words, a participant can not sue just because someone working for the defined benefit plan erred, that error has to actually cause the promised benefits of that participant to decrease.
In addition, for ERISA plans, the Supreme Court ruled 20 years ago, that ERISA pre-empted all such claims against non-fiduciary professional service providers to plans. Justice Scalia, writing for the Court in Mertens v. Hewitt Associates stated:
All that ERISA has eliminated, on these assumptions, is the common law's joint and several liability, for all direct and consequential damages suffered by the plan, on the part of persons who had no real power to control what the plan did. Exposure to that sort of liability would impose high insurance costs upon persons who regularly deal with and offer advice to ERISA plans, and hence upon ERISA plans themselves.
Although the DB plan participants cannot bring suits against the plan actuaries, the plan trustees or sponsor can. So the practical impact of this doctrine is not as great as it might seem.
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