A multinational biotechnology company based in Cambridge, Mass., has agreed to pay $9.75 million to retirement plan participants and beneficiaries to settle a lawsuit over alleged ERISA violations, according to a recent settlement notice filed in a U.S. District Court in Boston. Biogen, which specializes in therapies for neurological disorders, was accused of failing to properly monitor its 401(k) plan’s investment performance and neglecting to protect participants from excessive fees. The case serves as a reminder of the critical importance of fiduciary responsibility and diligence in managing retirement plan fees, especially in today's litigious and complex environment.
Excessive Fees and Poor Investment Performance
According to the plaintiffs of the suit, Biogen failed to meet its fiduciary duty by charging excessive fees and retaining underperforming investments. The suit itself was a consolidation of two separate suits against the company, both filed in 2020, and covered all employees who had participated in the company’s 401(k) plan from 2014 to the filing date. While the defendants attempted to have the claims dismissed, U.S. District Court Judge Denise J. Casper ruled in 2021 that the consolidated case could proceed to trial. The judge found that there was significant evidence to allow the case to be tried, including indications that Biogen had chosen retail-priced investment shares when institutional prices had been available, and that the company had failed to remove poorly performing investments in a timely manner.
A Settlement and Non-monetary Relief
In addition to a multimillion-dollar settlement, the ruling also requires Biogen to take concrete steps to ensure the company upholds its fiduciary duty in the future, including holding quarterly retirement committee meetings, attending annual fiduciary training and completing an RFP for investment advisory services. The company also agreed to consider expanding the retirement committee from three members to five, as well as undertake a review of the investment lineup. According to the settlement document filed by the plaintiffs’ legal team, “The non-monetary relief directly addresses the breaches of fiduciary duty alleged in the class action and would minimize the risk of future losses to the plan.”
Staying Ahead of the Suits
While ERISA litigation levels for the first half of 2023 are lower than 2022’s by nearly 50%, experts say this year’s dip is partly caused by the large volume of pending lawsuits already on many firms’ plates. So while there may be fewer new suits at the moment, that doesn’t mean the 401(k) environment is getting significantly less litigious. With PlanFees’ suite of innovative and robust benchmarking tools, you can gain actionable insight into your clients’ plans that can help keep fees in line — and reduce the chance of unnerving litigation.Sources