
The Employee Retirement Income Security Act (ERISA) imposes the duties of loyalty and prudence on fiduciaries who look after retirement plans. In this case, the complaint alleges that Laboratory Corporation of America Holdings (Labcorp) has breached these duties to the Laboratory Corporation of America Holdings Employees’ Retirement Plan by “caus[ing] the Plan to pay unreasonable and excessive fees for recordkeeping and other administrative services.”
The class for this action is all persons, except Labcorp Holdings and its immediate family members, who were participants in or beneficiaries of the plan, at any time between August 17, 2016 and the present.
Because the money in the retirement accounts grows and compounds over a long period of time, the complaint alleges, even a small difference in fees can become a big difference over the span of a working life: “The US Department of Labor has noted that a 1% higher level of fees over a 35-year period makes a 28% difference in retirement assets at the end of a participant’s career.”
As of the end of 2020, the Labcorp plan had around $3.9 billion in assets and more than 55,000 participants with account balances, which the complaint claims means it is a “mega plan,” with significant bargaining power in the market for recordkeeping and other services. The complaint alleges that the company should have made sure that the fees and expenses paid by participants were reasonable and that the compensation third-party providers received for their services was not excessive.
The recordkeeper for the plan over the class period was Fidelity Investments Institutional Operations Company, Inc.
The complaint suggests that Fidelity receives revenue-sharing compensation, although it does not detail the amount. It does, however, claim that revenue-sharing can be a way to hide the true amounts of fees paid for services.
The complaint also suggests “[u]pon information and belief,” that when participants deposit or withdraw money, it goes through a Fidelity clearing account, and that Fidelity is permitted to keep the interest on this account as another form of indirect compensation.
Finally, the complaint claims that Fidelity receives direct compensation from participants of between $40 and $49 per participant, while the complaint asserts, “Plans of similar size pay no more than $25 per participant annually—or less for recordkeeping fees.” The complaint refers to a lawsuit against Fidelity’s own retirement plan that suggests that the fees should be even lower, in the range of $14-$21 per year during the class period.
The complaint therefore calculates that Fidelity has received something like $150 per participant per year for recordkeeping when it should be paid only around $25 per participant per year.
According to the complaint, Labcorp should have been putting out requests for proposals for recordkeeping services at least every three to five years, to find out what rates other recordkeepers would charge. However, the complaint suggests that the company has not done so at all during the class period.
Article Type: LawsuitTopic: Employment
Most Recent Case Event
Labcorp Retirement Plan Recordkeeping Fees ERISA Complaint
August 18, 2022
The Employee Retirement Income Security Act (ERISA) imposes the duties of loyalty and prudence on fiduciaries who look after retirement plans. In this case, the complaint alleges that Laboratory Corporation of America Holdings (Labcorp) has breached these duties to the Laboratory Corporation of America Holdings Employees’ Retirement Plan by “caus[ing] the Plan to pay unreasonable and excessive fees for recordkeeping and other administrative services.”
Labcorp Retirement Plan Recordkeeping Fees ERISA ComplaintCase Event History
Labcorp Retirement Plan Recordkeeping Fees ERISA Complaint
August 18, 2022
The Employee Retirement Income Security Act (ERISA) imposes the duties of loyalty and prudence on fiduciaries who look after retirement plans. In this case, the complaint alleges that Laboratory Corporation of America Holdings (Labcorp) has breached these duties to the Laboratory Corporation of America Holdings Employees’ Retirement Plan by “caus[ing] the Plan to pay unreasonable and excessive fees for recordkeeping and other administrative services.”
Labcorp Retirement Plan Recordkeeping Fees ERISA Complaint