United Surgical Partners International (USPI) is stitching up a legal wound with a costly ERISA settlement. After years of legal wrangling, the Texas-based ambulatory care company has agreed to pay $1.475 million to settle claims related to its 401(k) plan. While the outcome spares USPI the uncertainties of further litigation, the case underscores the importance of regular fee benchmarking in mitigating fiduciary risk.
The Legal Diagnosis
According to plaintiffs, symptoms of fiduciary trouble began between 2015 and 2018, when USPI failed to monitor recordkeeping costs and investment options, leading to unnecessary expenses for plan participants. The settlement, approved following a federal appeals court decision to let the case proceed, brings an end to years of courtroom battles. USPI’s case serves as a reminder of the importance of using a multipronged risk mitigation strategy to identify and address high fees before they escalate into costly complications for plan sponsors.
Hefty Settlement Reopens Old Wounds
The USPI 401(k) was merged into Tenet Healthcare’s retirement plan after the period covering the complaint. Though neither Tenant nor its retirement plan was named as a defendant in this case, it’s a reminder nonetheless that fiduciary duties required under ERISA enable plaintiffs to scrutinize decisions and fee structures from well into an organization’s past. This makes ongoing monitoring, benchmarking and thorough documentation critical in efforts to help safeguard plan fiduciaries against future claims.
Misdiagnosed Fees Can Lead to Costly Complications
While the United Surgical case didn’t ultimately go to trial, the decision to settle reflects the reality that many plan sponsors choose settlements over protracted, expensive legal battles. Excessive fee cases have become increasingly common since Hughes v. Northwestern University reaffirmed the duty of plan fiduciaries to monitor all retirement plan investments and remove any imprudent options — even when participants have access to other, prudent choices in the lineup. This trend has given rise to a cottage industry of specialized firms targeting plan fiduciaries.
A 2022 Euclid Fiduciary whitepaper, Debunking Recordkeeping Fee Theories in “Excessive” Fee Cases, highlights how some suits have relied on flawed benchmarks or mischaracterizations of fees reported on Form 5500 filings. These include inaccurately characterizing transaction costs or amounts already rebated to participants as part of alleged recordkeeping overcharges. Such discrepancies further underscore the importance of accurate benchmarking, proactive fee management and thorough documentation to help mitigate legal risks.
Monitor Fees With Surgical Precision
With PlanFees’ tools like Prism Total Fees Benchmarking and RFP Express powered by RPAG, you can perform a quick diagnostic on fees, negotiate better terms and help ensure your clients’ plans stay in good health. Don’t let high fees become a critical condition for your plan — benchmark better with PlanFees.
Sources- https://www.law360.com/articles/2279921/outpatient-surgery-co-strikes-1-5m-deal-to-end-401-k-suit
- https://www.euclidspecialty.com/wp-content/uploads/2022/04/Euclid-Fiduciary-Whitepaper-Debunking-Recordkeeping-Fee-Theories-April-2022-Rev-Ed.pdf
- https://www.pionline.com/courts/401k-lawsuit-against-united-surgical-revived-federal-appeals-court
