ERISA Lawsuit Plaintiffs Worked Hard for the Money

Winston-Salem, NCEmployees who filed an ERISA lawsuit against N.C. Baptist Hospital could begin receiving their ERISA plan settlement money as early as April. The lawsuit alleged ERISA investment fees charged to employees were higher than what other corporate clients paid, which reportedly constituted a violation of ERISA laws.

According to the Winston-Salem Journal (2/25/12), 15,000 people participated in the class-action lawsuit, which was filed in January 2009, against MedCost—which is co-owned by N.C. Baptist Hospital and Carolinas HealthCare System alleging the company violated ERISA laws. A $5.38 million settlement was approved by the judge in late February after no class members objected. The lawsuit claimed that the defendants charged N.C. Baptist Hospital employees to pay more in fees for their benefits than other corporate clients were charged.

Under the Employee Retirement Savings Act (ERISA), employers can only use companies they own to provide benefits if doing so is in the best interests of the employees. Baptist responded to the lawsuit saying it had not committed any wrongdoing.

Included in the class were current and former N.C. Baptist Hospital employees who participated in the plan from March 6, 2002 through May 7, 2009.

Although ERISA plan fees may not seem like an important issue, those fees can add up over the life of a plan, and cost employees and plan participants a good deal of the money they thought they were investing; some experts say that as much as half of a plan's assets can be lost to fees and expenses.

That is one of the reasons why amendments to ERISA laws require service providers to set out what fees are being charged to a plan. Furthermore, service providers must tell fiduciaries what services are being provided and how much those services cost. The amendments were made to prevent ERISA plan participants from paying high, hidden fees, which can drastically affect a plan's value.

Lawsuits have been filed against employers and fiduciaries alleging employees paid unreasonably high, hidden fees to their plans' service providers. They have also alleged that fiduciaries failed to act in plan participants' best interests when choosing a plan for their ERISA benefits.