HR-10703-119
Referred to the House Committee on Education and Workforce.
Sponsored by Robert Scott (D-VA)
What it does
The bill would amend ERISA section 502 to let a plan participant or beneficiary sue as an assignee of the plan for relief under section 409 (fiduciary breach), on the plan's behalf, and would require serving the complaint on the plan. Money recovered through a win, substantial win, or settlement would count as plan assets. The participant who brings the suit would receive at least 0.5% and at most 1% of the amount recovered, plus other relief the court may award such as costs and expenses. Where several participants sue, the court would divide that share equitably among plaintiffs (or named plaintiffs in a class action), and a participant who files while a similar action is pending would have to promptly move to consolidate.
Who benefits
Participants and beneficiaries in ERISA-covered retirement and benefit plans, who would gain a financial incentive (0.5%-1% of recoveries plus costs) to bring fiduciary-breach claims. Plans themselves, which would receive recovered funds as plan assets. Plaintiffs' securities and benefits law firms, which may see more cases. Other plan members, who may benefit indirectly if recoveries and deterrence reduce losses from mismanagement.
Who is hurt
Plan fiduciaries, sponsoring employers, and service providers (recordkeepers, investment managers), who could face more lawsuits and higher defense and insurance costs. Plan participants may bear indirect costs if plans pass along litigation expenses or fees. Courts may see greater caseloads and consolidation disputes. Plaintiffs who prevail would receive only a small percentage of recoveries, which some may find insufficient for the risk of suing.
Supporters argue
Supporters argue that fiduciary breaches often go unremedied because individual participants have little financial reason to sue on behalf of a plan, and that a 0.5%-1% award plus costs would give them a modest, defined incentive. They contend that treating recoveries as plan assets keeps the money in the plan, that service on the plan and the consolidation requirement guard against duplicative suits, and that stronger private enforcement supplements limited Department of Labor resources.
Opponents argue
Opponents argue that a payout tied to the size of a recovery would encourage more lawsuits, including weak ones filed to obtain settlements, raising defense costs and fiduciary liability insurance premiums that plans and sponsors may pass on to participants. They contend that ERISA already allows suits under section 502(a)(2), that a fixed bonus may distort who sues and when, and that employers could become less willing to offer or sponsor plans.
Constitutional context
Congress regulates employee benefit plans under the Commerce Clause, as in the long-standing ERISA framework. Standing questions may arise under Article III, since TransUnion v. Ramirez (2021) requires a concrete injury, and Vermont Agency v. United States ex rel. Stevens (2000) upheld assignee-style suits for the government; whether plan-assignee standing satisfies Article III after Thole v. U.S. Bank (2020), which denied standing to participants in a fully funded defined-benefit plan, is uncertain.
Checks and balances
Congress would expand private enforcement rights, shifting some oversight from the Department of Labor to participants and federal courts, which would control awards, consolidation, and the distribution of recoveries.
Historical precedent
Qui tam provisions of the False Claims Act similarly give private plaintiffs a percentage share of recoveries obtained on behalf of the government.