This class action sues Molina Healthcare, Inc., claiming it did not fulfill its fiduciary duties to the Molina Salary Savings Plan, its company retirement plan, which is governed by the Employee Retirement Income Security Act (ERISA). The complaint claims that the plan offered untested target date funds as investment options and that Molina did not use the plan’s bargaining power to obtain reasonable management fees.
The class for this action is all participants and beneficiaries of the Molina Healthcare Salary Savings Plan, between March 18, 2016 and the date of judgment in this case.
Retirement plan fiduciaries have the duties of loyalty and prudence to the plan’s participants and beneficiaries. The complaint alleges, “These duties are the ‘highest known to the law’ and must be discharged with ‘an eye single to the interests of the participants and beneficiaries.’” The complaint makes main two allegations about Molina’s conduct: (1) that it replaced good investment options with untested ones that did not perform well, and (2) that it that it did not use the plan’s bargaining power to get reasonable fees for the plan.
The complaint alleges, Molina “caused the Plan to invest in flexPATH’s untested target date funds, which replaced established and well-performing target date funds used by participants to meet their retirement needs.”
The flexPATH Index funds were target date funds that the complaint says “had only been in existence for a few months.” It alleges that the funds’ “target date fund management style had never been used in any target date fund solution offered in the marketplace.” These funds also invested underlying assets in BlackRock target date funds, the complaint alleges, which meant they incurred an additional set of fees.
Previously, the plan had offered Vanguard target date funds, which the complaint says have a strong performance history. The complaint claims that Vanguard’s Target Retirement Trust Plus shares charged 6-7 bps and its Trust Select shares 5 bps, while the flexPATH shares were charging 26 bps.
According to the complaint, these funds were not only expensive; they also underperformed other target date funds that were more established, like those from Vanguard and Fidelity. However, they were kept in the plan until 2020.
Also, the complaint alleges that Molina increased plan expenses by offering higher-cost share classes for the Plan investments.” The complaint claims that the plan, given its size, could have obtained share classes with lower costs. The complaint displays a table comparing the actual share costs versus the costs of other available share classes.
Article Type: LawsuitTopic: Employment
Most Recent Case Event
Molina Retirement Plan Expenses and Performance Complaint
March 18, 2022
This class action sues Molina Healthcare, Inc., claiming it did not fulfill its fiduciary duties to the Molina Salary Savings Plan, its company retirement plan, which is governed by the Employee Retirement Income Security Act (ERISA). The complaint claims that the plan offered untested target date funds as investment options and that Molina did not use the plan’s bargaining power to obtain reasonable management fees.
Molina Retirement Plan Expenses and Performance ComplaintCase Event History
Molina Retirement Plan Expenses and Performance Complaint
March 18, 2022
This class action sues Molina Healthcare, Inc., claiming it did not fulfill its fiduciary duties to the Molina Salary Savings Plan, its company retirement plan, which is governed by the Employee Retirement Income Security Act (ERISA). The complaint claims that the plan offered untested target date funds as investment options and that Molina did not use the plan’s bargaining power to obtain reasonable management fees.
Molina Retirement Plan Expenses and Performance Complaint