A participant in a 401(k) run by Laboratory Corp. of America Holdings sued the company saying it violated ERISA by allowing the plan to charge excessive record-keeping fees and by failing to reduce the fees or search for a record keeper that would charge less.
"Defendant did not act prudently or in the best interests of the Plan's participants because it caused plan participants to pay excessive and unreasonable fees," said the lawsuit filed Aug. 18 in a U.S. District Court in Greensboro, N.C.
"Defendant failed to have a proper system of review in place to ensure that participants in the plan were being charged appropriate and reasonable fees," said the complaint in Damian McDonald vs. Laboratory Corp. of America Holdings.
"Additionally, defendant failed to leverage the size of the plan to negotiate the lowest fees for participants," said the complaint which is seeking class-action status.
Jacob Rund, a Laboratory Corp. spokesman, wrote in an email that the company doesn't comment on ongoing litigation.
The lawsuit also said the sponsor had failed to conduct a record-keeping RFP since 2016. "If defendant had undertaken a prudent RFP to compare Fidelity's compensation received from the Plan with those of others in the marketplace, defendant would have recognized that Fidelity's compensation for record-keeping services during the class period has been (and remains) unreasonable and excessive," said the complaint, referring to the period starting Aug. 17, 2016.
Fidelity Investments isn't a defendant.
The Laboratory Corp. of America Holdings Employees' Retirement Savings Plan, Burlington. N.C., had $3.9 billion in assets as of Dec. 31, 2020, according to the latest Form 5500.
