Teva Pharmaceuticals USA Inc. agreed to pay $2.6 million to settle claims by current and former participants in the company's 401(k) that plan fiduciaries violated ERISA by failing to reduce fees and to offer less expensive investment options that are similar to existing ones.
The agreement, which requires court approval, was filed Wednesdayin U.S. District Court in Philadelphia.
"Defendants strongly dispute the claims asserted in the action and deny that they ever engaged in any wrongdoing, violation of law or breach of duty, said the settlement document in the case of Pinnell et al. vs. Teva Pharmaceuticals USA Inc. et al.
"Further, named plaintiffs would face an uncertain outcome if the action were to continue," the document said. "Although the court denied defendants' motion to dismiss the action, this case was far from over."
The document added that "continued litigation could result in a judgment in favor of the defendants and against the named plaintiffs and class."
The plaintiffs filed suit in December, alleging that plan fiduciaries should have considered offering collective investment trusts instead of mutual funds, saying that the collective investment trusts were cheaper than comparable existing mutual fund options. They said the plan should have offered lower-cost share classes of mutual funds that were the "exact same investment" as options in the plan.
Teva Pharmaceuticals USA Inc., North Wales, Pa., is a wholly owned subsidiary of Israel-based Teva Pharmaceutical Industries Ltd. The parent company isn't a defendant.
The Teva Pharmaceuticals Retirement Plan had assets of about $2 billion as of Dec. 31, 2019, according to the latest Form 5500 filing.