Novant Health, a North Carolina-based network of physician clinics, is the target of a class action lawsuit that contends the company breached their fiduciary duties under the Employee Retirement Income Security Act. The class members are employees and retirees of Novant enrolled its seven contribution plans, which are governed by third-party service providers that the lawsuit asserts were compensated excessively. The extreme and unwarranted fees caused the class members a great reduction in retirement assets.
All new Novant employees are automatically enrolled in the company’s Retirement Plus Plan, which is in fact two plans: the Tax Deferred Savings Plan and the Savings and Supplemental Retirement Plan.
The federal Employee Retirement Income Security Act provides protection for individuals enrolled in private industry pension and health plans. According to the Act, participants must be provided information regarding each plan’s particular features and funding. Architects and managers of private employee compensation plans are held to certain fiduciary responsibilities, and subject to lawsuits should they breach these standards. Essentially, participants in their employer’s plans may sue for benefits and breaches of fiduciary duty.
On January 27, 2014, Karolyn Kruger, a Novant Health doctor and participant in the company’s plans, sent a written request to the Chairman of the Administrative Committee. The letter asked for a copy of the Novant employee contribution plan along with the contract Novant had with Great-West Retirement Services, the third-party plan manager. One month after the request, Kruger still had not received a response.
The defendants in the lawsuit are Novant Health, Novant Administrative Committee, and Novant Health Retirement Plan Committee. The class members contend the defendants breached the Employee Retirement Income Security Act by not providing employees with copies of the plans into which they were paying. Additionally, the suit asserts millions of dollars in excessive fees were paid to Great-West Retirement Services and brokerage company D.L. Davis, who received commissions from the Novant Health employee plans.