As of March 2023, United Surgical Partners International’s 401(k) plan seemed to have a clean bill of health. A prior lawsuit alleging that the Texas-based ambulatory care company neglected its fiduciary duty by maintaining low-performing, high-cost funds in its 401(k) plan had been dismissed not once, but twice. The second opinion, however, didn’t stick. By April 2024, the company’s legal situation became more uncertain, as a federal appeals court reversed that decision and allowed the suit to proceed. The case illustrates the sometimes-protracted nature of ERISA litigation and highlights the importance of proper benchmarking as one part of a prudent, multi-pronged strategy to help avoid costly and time-consuming court proceedings.
Initial Treatments
The first lawsuit was filed in 2021 by a group of former employees over a now-terminated 401(k) plan — the company has since merged its 401(k) offerings with that of its parent company, Tenet Healthcare. The plaintiffs alleged that, during the period between April 30, 2015, and Dec. 31, 2018, some investments in the lineup were more expensive and performed worse than otherwise identical available investments. In addition, they argued that the plan’s recordkeeping fees were excessive and said that these symptoms of sub-par plan health should have been discovered with proper benchmarking.
A circuit court in Dallas dismissed the suit twice — once in 2022 and again in 2023. During the second dismissal, the judge remarked, “The mere existence of lower cost alternatives does not necessarily bring about a plausible claim.” For a time, it seemed that United Surgical Partners International was in the clear.
A New Diagnosis?
Despite the lawsuit seemingly in remission, a three-judge panel in New Orleans revived it in April of 2024. Their decision states that the circuit court’s decision to dismiss the suit was premature and that the evidence and claims presented “are sufficient to support a plausible duty of prudence claim.”
However, their statement also stated, “We express no opinion about the merits of the case,” noting that their ruling simply finds the claim sufficient for further evaluation in court. It’s uncertain what the future proceedings will bring, but the suit calls attention to the need to carefully and regularly monitor a plan’s investment, recordkeeping, administrative and advisory fees.
Keep Your Plan in Good Health
Frequent benchmarking with PlanFees’ suite of tools helps you evaluate a plan’s fee structure to identify areas that may need attention. With Prism Total Fees Benchmarking, you can provide a quick fee checkup to evaluate whether a plan’s fees are low, average, or high relative to those of similar plans. If you identify a high recordkeeping fee, you can use your benchmark to help negotiate with service providers. Or leverage our rapid quoting engine, RFP Express, to receive actual quotes from the industry’s top providers within 24 hours.
With PlanFees, you can obtain fast and accurate benchmarks in between customary three-to five-year live bids. More frequent fee checkups can help keep your clients happy and their plans healthy.
Benchmark better with PlanFees.
