John Stewart
Tuesday, Oct. 22, 2024
On October 17, 2024, a federal district court in North Carolina granted Rule 23 class certification to a group of LabCorp employee retirement plan participants who have alleged LabCorp and plan fiduciaries overcharged on fees and offered substandard investment options, in violation of the Employee Retirement Income Security Act (“ERISA”). The plan—which the Court noted had approximately 55,000 participants as of 2020—holds approximately $3.8 billion in assets.
ERISA is a federal law that protects workers by requiring most voluntarily established retirement and health plans in private industry to comply with minimum standards, including providing information to participants, requiring plan managers who control plan assets to meet fiduciary obligations, and giving participants the right to challenge adverse benefits decisions.
According to the plaintiff’s allegations, plan management has failed to live up to its fiduciary duties to the plan, by stocking the plan’s investment menu with underperforming/overpriced investment options and by overcharging plan members on recordkeeping fees. Because of the plan’s large size and bargaining power, plaintiff asserted, plan managers should have been able to find recordkeeping services for an annual rate of only about $25 for each participant, when in fact they had been paying nearly double that rate (about $43 or more for each participant).
Similarly, the plaintiff accused LabCorp of “allowing [plan recordkeeper] Fidelity to pocket from the plan millions in float compensation.” Plaintiff’s counsel asserted that these practices violated LabCorp’s fiduciary duties to the plan and sought certification of a Rule 23 class for those harmed. Over defendant’s objections—including its accusation that the plaintiff knew nothing about the case other than what he had been told by his counsel—the court granted the Rule 23 motion and certified a class of all plan participants and beneficiaries since November 2016.
Federal Rule of Civil Procedure 23 allows one or more individuals to sue on their own behalf as well as on behalf of others who are similarly situated if certain conditions are met. These types of cases allow groups of people who have been adversely affected by similar conduct to work together to sue a defendant or group of defendants.
It can be difficult to figure out whether your retirement plan is being administered lawfully, and even large, reputable companies like LabCorp (with its plan serviced by Fidelity) have been accused of administering their retirement plans in ways that violate ERISA. If you think you are experiencing an issue similar to the one involved in this lawsuit, please reach out to us for a free consultation. We can help you understand your rights and options.
