Participant Loses ERISA Claim over Plan Funding Issues

March 13, 2008 ( - A former employee of a health-care facility can't sue his old employer for not properly funding the company's profit-sharing plan, a federal judge has ruled.

U.S. District Judge William D. Stiehl of the U.S. District Court for the Southern District of Illinois ruled that plaintiff Joey Wegmann could not pursue the breach claim and demand damages equal to the 2004 and 2005 employer contributions Wegmann claimed were never made.

Wegmann asserted he was entitled under Section   1132(a)(2) of the Employee Retirement Income Security Act (ERISA)to the damages from Dr. Veena K. Gupta, owner of Care First Medical Center. Wegmann worked at the facility until March 2005.  However,Stiehl said the breach claim would be dismissed because Wegmann’s allegation was brought on behalf of himself, not on behalf of the plan – a question that was recently presented – with what, at least on the surface, appears to be a different result – to the U.S. Supreme Court (see  Justices OK Individual ERISA Suits in Landmark Ruling ).  In that case, however, the claim was asserted under a different provision of ERISA.

According to Stiehl’s ruling, Gupta contributed 5% of Wegmann’s salary to the plan in 2002 and 12% in 2003, but did not fund the plan in 2004 and 2005. The plan was terminated in 2005.   

Stiehl, however, refused to dismiss Wegmann’s allegation that Gupta improperly refused to provide him with copies of the plan documents or an accounting of his accrued benefits.

Also, what Wegmann claimed were ERISA violations because of the plan not being funded in 2004 and 2005 did not legally apply to the Care First plan because it was an individual account plan, according to the court. A second ERSISA section cited by the plaintiff was also inapplicable because it only pertained to multi-employer plans.   

Stiehl’s ruling is  here .