A participant in a 401(k) plan offered by Quest Diagnostics Inc. has sued the company for allegedly mismanaging the plan in violation of ERISA.
"Instead of leveraging the plan's tremendous bargaining power to benefit plan participants, Quest caused the plan to pay unreasonable and excessive fees," said the complaint filed Jan. 10 in a U.S. District Court in Newark, N.J.
"In many instances during the class period, defendant failed to prudently monitor the plan to determine whether the plan was invested in the lowest-cost share class available for the plan's mutual funds, which are identical to the mutual funds in the plan in every way except for their lower cost," said the complaint in the case of Morales vs. Quest Diagnostics Inc.
The lawsuit, which seeks class-action status, defined the class period as starting on Dec. 22, 2016, and continuing to present day.
The complaint also criticized plan executives for offering an actively managed Fidelity target-date series instead of a less expensive passively managed Fidelity target-date series. Fidelity isn't a defendant.
Although Quest made the index target-date series available in 2016, "it left participants' funds in the higher-cost share unless the participant took action to transfer the funds to the lower-cost share class," the lawsuit said. "Despite the availability of lower-cost shares, defendant did not transfer plan holdings in any of these funds from higher-priced share classes into the lowest-cost share classes, in breach of its fiduciary duties."
Jillian Flanagan, a spokeswoman for Quest, wrote in an email that the company doesn't comment on pending litigation.
The Quest Diagnostics Profit Sharing Plan, Secaucus, N.J., had assets of $5.75 billion as of Dec. 31, 2021, according to the latest Form 5500.