Pension plans can sue actuaries and other professional consultants for malpractice under state law, although such suits are barred by federal pension law, a federal appeals court ruled. The decision by the 2nd U.S. Circuit Court of Appeals in Alfred G. Gerosa v. Neil J. Savasta allows the $30 million Cement Masons Local 780 Pension Fund, Flushing, N.Y., to sue its former actuary, Savasta & Co. Inc., in connection with a $10 million shortfall the plan claims resulted from a miscalculation of its funded status in the mid-1990s.
Although the appellate court threw out the pension funds claims under ERISA, the court agreed with other appellate courts that pension funds can seek redress from professionals under state law. "Immunizing actuaries could harm the financial integrity of the plans Congress intended to protect. As the allegations here illustrate, careless actuarial work can cause plans serious financial damage, according to the ruling.