A St. Louis law firm on March 12 filed a lawsuit against Novant Health Inc. alleging current and former employees lost millions of dollars from their retirement plans due to excessive fees.
According to Jerry Schlichter, an attorney with Schlichter, Bogard and Denton, the lawsuit was filed in U.S. District Court in Greensboro on behalf of six plaintiffs, including Karolyn Kruger, a former chief of staff at Novant Health Thomasville Medical Center.
Schlichter said the suit alleges Novant Health breached its fiduciary duties to participants of its retirement plan by not ensuring fees for various bookkeeping and administrative services were reasonable.
“[The plaintiffs] all are in the retirement plan of Novant,” Schlichter said. “The case they brought is one for excessive fees being charged to them in their retirement plan. The responsibility of the employer who has a retirement plan such as this is to work as the trustee of the employee's money, to make sure these fees are reasonable and not excessive. We allege the fees they were paying were excessive and thus reduced their retirement assets.”
Novant spokesperson Caryn Klebba in a email to the Thomasville Times on Thursday said the company has not officially been served with the lawsuit and declined to comment on any active litigation. Klebba did say that a Retirement Plan Committee appointed by the Novant Health Board of Trustees carefully oversees the selection of the plan’s investment options and any associated fees.
“The committee receives professional advice from independent advisers, including retirement plan investment experts and is deeply committed to selecting and administering the investment options under the plans in the best interest of participants and in accordance with applicable laws and regulations,” Klebba wrote in her email. “Our retirement plan participants also receive detailed explanations of their investment options and plans fees on an annual basis.”
Novant Health's retirement plan currently has more than $1 billion in total combined assets. A specific amount of compensation was not included in the complaint, Schlichter said, but the suit could impact approximately 25,000 people enrolled in the plan.
“It would depend on the extent of the losses and the fees that come out with further developments in the case,” said Schlichter. “The losses are continuing. Six people brought the suit on behalf of all of the employees and retirees in the retirement plan. We're seeking that their losses be restored to them. That number has not be calculated or determined. That will be for later on in the case.”
Excessive fees named in the suit include record keeping fees paid to Great West Life & Annuity Insurance Co., brokerage commissions to D.L. Davis & Co. of Winston-Salem and investment management fees. The lawsuit outlines the impact a 1 percent reduction can have on a person's retirement plan.
“Unnecessary fees can reduce an average 401K participant's lifetime savings by over $100,000,” Schlichter said. “It's compounded year after year. These fees have gone dramatically up in recent years without additional services being provided.”
The Department of Labor, which oversees all retirement plans, has required greater fee disclosure to employees and retirees in recent years, Schlichter said. The suit also is seeking changes in the plan moving forward so excessive fees are not charged in the future.
Novant Health has 30 days from March 12 to respond to the complaint. The court then will direct how to proceed from there.
Staff Writer Eliot Duke can be reached at 888-3578, or email@example.com.