Cerner Corp. agreed to pay $4.1 million to settle allegations by former participants in the company's 401(k) plan that fiduciaries violated their ERISA duties by retaining poor-performing investment options and charging high fees.
The preliminary settlement, which requires court approval, was filed Feb. 18 in U.S. District Court in Kansas City, Mo., represents the consolidation of two complaints — one filed in January 2020 and the other in April 2020.
The proposed settlement of the class-action suit contains some non-monetary terms, including the requirement that plan fiduciaries issue an RFP for record keeping before the contract of the current record keeper expires.
The document also said no Cerner employee working in the company's investor relations unit may serve on the retirement plan committee. The plan's record keeper also must send an annual notice to participants reminding them of the benefits of diversification, the document said.
"Cerner denies plaintiffs' claims of wrongdoing," said the document in the case of Freck et al. vs. Cerner Corp. et al.
The original complaints said Cerner fiduciaries failed to reduce plan expenses and didn't replace existing investments with similar ones that had better results and/or were less expensive. Plaintiffs said fiduciaries should have looked at cheaper share classes for mutual funds and didn't consider offering collective investment trusts or separate accounts, which they alleged had lower fees.
Cerner Corp. Foundations Retirement Plan, North Kansas City, Mo., had assets of $2.72 billion as of Dec. 31, 2019, according to its latest Form 5500.