A federal judge in Louisville, Ky., has ruled for Humana Inc., saying former employees failed to provide sufficient proof that the company and its 401(k) plan executives charged excessive record-keeping fees and failed to adequately search for a less expensive record keeper.
A crucial reason for U.S. District Court Judge Rebecca Grady Jennings’ May 24 decision was the plaintiffs’ expert witness, Veronica Bray, whose testimony was excluded by the judge. Bray compared Humana’s record-keeping fees with those of fees at six other plans to support plaintiffs' allegations of ERISA violations.
“Because Bray provides no reasonable explanation for her selection of the six plans and herself acknowledges they are not comparable to the Humana plan, the Court will exclude her testimony,” Jennings wrote in Moore et al. vs. Humana Inc. et al.
“The Court finds that Bray’s opinion applies no reliable methodology to the pertinent questions in this litigation,” the judge wrote, referring to the prudence of Humana’s choosing a record keeper and charging fees that were commensurate with services offered by the record keeper.
On the other hand, the defendants showed that the plan’s record keeper offered the lowest fees of any provider solicited via an RFP and that annual benchmarking revealed as “still reasonable” the record-keeping fees, Jennings wrote.
“Bray’s method … is not a reliable basis for concluding the fees were unreasonably high,” the judge wrote in granting summary judgment to the defendants.
A motion for summary judgment is usually filed after the parties have completed discovery, giving a judge the opportunity to review details of a case. A motion to dismiss, usually requested soon after a complaint is filed, argues that the plaintiff has failed to state a claim.
The plaintiffs sued in April 2021, and Humana lost two earlier petitions to have the lawsuit dismissed.
Humana Retirement Savings Plan, Louisville, Ky., had $6.4 billion in assets as of Dec. 31, 2022, according to its most recent Form 5500.
