Three participants in a 403(b) plan offered by the Nemours Foundation have sued the non-profit operators of children's hospitals and outpatient services for allegedly violating ERISA in charging excessive record-keeping fees and maintaining certain investment options.
"The account statements that Nemours provides to its plan participants do not disclose the actual dollar amounts of fees paid to third-party service providers by plan participants," said the lawsuit filed Feb. 6 in a U.S. District Court in Jacksonville, Fla.
The lawsuit criticized the foundation for allegedly allowing the plan's record keeper, Transamerica Retirement Solutions, to charge excessive fees. Plaintiffs chastised the foundation for failing to negotiate better terms.
Transamerica isn't a defendant..
"Nemours failed to prudently manage and control the plan's record-keeping costs and other compensation paid to Transamerica," said the complaint in the case of Cannarozzo et al. vs. The Nemours Foundation.
The plaintiffs, who are seeking class-action status, wrote that RFPs should be conducted every three to five years, alleging that the foundation hadn't conducted an RFP since at least 2012. "Nemours could have and should have used the plan's increasing size and long-standing relationship with Transamerica as bargaining power to reduce the plan record-keeping fees," the lawsuit said.
The plaintiffs also criticized the plan's investment selection, saying fiduciaries "failed to prudently monitor and select proper share classes of 13 investments."
The plan should have selected lower-price share classes of a target-date series and mutual funds "that were/are identical to the funds in the plan in every way except for their lower cost," the lawsuit said.
Margot Winick, a foundation spokeswoman, wrote in an email that Nemours declined to comment.
As of Dec. 31, 2021, the plan had $1.04 billion in assets, the lawsuit said.
