Health Insurer Settles 401(k) Suit for $23.7M Over Vanguard Fees
Health insurance firm Anthem Inc. has agreed to settle a suit brought by employees alleging excessive fees in the company’s 401(k) retirement plan despite most of the plan’s offerings coming from the low-cost fund provider the Vanguard, according to news reports.
Anthem’s $7 billion 401(k) plan had several Vanguard target-date collective investment trust funds, 11 Vanguard mutual funds, two non-Vanguard mutual funds and an Anthem common stock fund, InvestmentNews writes. The suit, filed in December 2015, alleged that plan participants were overcharged on recordkeeping services as well as higher investment fees than necessary because there were lower-cost share classes available, according to the publication. Anthem denies the allegations but agreed to settle for $23.65 million, InvestmentNews writes, citing a court document filed earlier this week in the U.S. District Court for the Southern District of Indiana. In addition, the plan sponsor agreed to bring on an investment consultant to assess whether the plan should continue using Vanguard funds, according to the publication. An Anthem spokeswoman declined comment to InvestmentNews.
Over the past 18 years, America’s largest 1,700 companies have paid out $6.2 billion in class action suits tied to the Employee Retirement Income Security Act, ranging from allegations of high 401(k) plan fees to misleading disclosures and inappropriate investments, according to a recent report by the nonprofit group Good Jobs First.