On November 9, the litigants in Kruger v. Novant Health, Inc. submitted a proposed settlement agreement (the “Agreement”) for approval to the United States District Court for the Middle District of North Carolina (the “Court”). Under the Agreement, Novant Health, Inc. and fiduciaries of various Novant Health, Inc. retirement plans (the “Defendants”) will pay $32 million to a settlement fund. That fund will be used to pay benefits to certain current and former plan participants, as well as attorneys’ fees and administrative expenses involved with the settlement.
This class-action case was filed on March 12, 2014. The plaintiffs mainly allege that the Defendants breached their ERISA duties by including unreasonably-priced investment options in the plans that were used in part to provide excessive compensation to two of the plans’ service providers. More specifically, the plaintiffs allege as follows:
In addition to the $32 million payment, the Defendants are also agreeing to substantial non-monetary terms. For example, the Defendants will conclude a request for proposal (“RFP”) competitive bidding process for recordkeeping, investment consulting and participant education services for the plans. As another example, Defendants are agreeing to review all current investment options in the plans and to revise the investment options, to ensure that the remaining options are held in the best interests of the plans’ participants.
As almost anyone familiar with class action litigation will tell you, a year-and-a-half constitutes an extremely short time for this case to reach a settlement. Typically, these cases are litigated for many years (even more than a decade) before settlement is reached or the court decides the case. Whether the Defendants believed their case was not strong, or they simply wanted to avoid further extensive litigation costs, this case adds to the list of ERISA litigation settlements this year that have exceeded 7 figures.
Although the Defendants continue to dispute the plaintiffs’ allegations and deny liability for any alleged ERISA violations, they are likely to feel that they are receiving coal in their stockings this holiday season.
Here is a link to the latest filing in this case: http://blog.fraplantools.com/wp-content/uploads/2015/11/Kruger-v-Novant-Settlement-Agreement.pdf