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Novant Health Inc. has reached a $32 million settlement with a group of current and former employees that accused the company of breaching fiduciary duties under the Employee Retirement Income Security Act (ERISA).
The class action lawsuit also names Novant’s administrative and retirement plan committees as co-defendants.
The Novant Health 401(k) class action lawsuit was initially brought by six current and former employees in March 2014, including Karolyn Kruger, a retired doctor who served as chief of staff at Thomasville Medical Center.
Specifically, the plaintiffs contend Novant breached its fiduciary duties by causing 401(k) retirement plan participants to pay millions of dollars in fees for excessive record-keeping and administrative services to third-party service providers Great West Life & Annuity Insurance Co. and D.L. Davis & Co. of Winston-Salem.
After two years of litigation, the parties negotiated a settlement where the plaintiffs agree to drop claims against Novant in exchange for Novant dispersing funds in distributions directly into employees’ tax-deferred retirement accounts.
Additionally, former plan participants will receive a check, according to the settlement proposal.
According to the plaintiffs’ counsel, there are about 25,000 affected Novant employees who had automatically been enrolled in the retirement plan since 2009. The lawsuit covers the time period of Oct. 1, 1998, to Sept. 30, 2015.
“This settlement provides significant benefits to virtually every participant in the Novant-sponsored retirement and savings plans,” the plaintiffs stated in support of the proposed settlement. “Moreover, the settlement provides unprecedented future relief in terms of scope and duration while also securing additional commitments for participants’ benefit.”
About one-third of the $32 million, or $10.67 million, will go to attorney fees. Each of the six named plaintiffs will receive $25,000.
The actual recovery for each member of the class action lawsuit depends on the number eligible for an award and the individuals’ average quarterly account balances during the class period.
According to the settlement, most members of the class-action lawsuit will receive their distributions directly into their tax-deferred retirement account.
Those who have already left the plans will be given the option to receive their distributions in the form of a check made out to them or as a rollover into another tax-deferred account.
There also is agreement on future “certain non-monetary terms and affirmative relief” that includes hiring a plan record keeper and investment adviser selected by Novant and approved by an independent consultant.
Novant Health denies the claims and contentions of the Class, that they are liable at all to the claims, and that the Class or the Plans have suffered any harm or damage.
Those who want to object to the terms of the settlement must do so by Aug. 24, 2016.
Who’s Eligible
Under the terms of the Novant Health 401(k) class action lawsuit settlement, Class Members include all current and former participants and beneficiaries who participated in any of the following retirement plans between Oct. 1, 1998 and Sept. 30, 2015:
- The Savings and Supplemental Retirement Plan of Novant Health, Inc. and the Tax Deferred Savings Plan of Novant Health, Inc. (collectively, the “Retirement Plus Plan”)
- The Franklin/Upstate 401(k) Plan
- The Presbyterian Women’s Care Corp. 401(k) Plan
- The Lakeside/Q-Neck 401(k) Plan
- The 457(b) Retirement Plan of Novant Health, Inc.
- The Retirement Plus Plan Wrap Nonqualified 457(b)/457(f) Plan of Novant Health, Inc. (the “457(f) Plan”)
Excluded from the class are members of the Novant Health Retirement Plan Committee, the Administrative Committee and members of Novant Health, Inc.’s Board of Trustees since Oct. 1, 1998.
Potential Award
VARIES.
Eligible Class Members can receive a distribution of the net settlement amount divided among all Class Members based on their Modified Average Account Balance during the Class Period.
The Modified Average Account Balance is calculated by determining each participant’s average, aggregate quarter-ending balance across all of his or her accounts in the Plans for two separate periods:
- Mar. 31, 2008 through Sept. 30, 2015 (Period 1 Average)
- Dec. 31, 1998 through Dec. 31, 2007 (Period 2 Average)
Next, the Period 1 Average shall be multiplied by four to determine the Modified Period 1 Average.
Then, the Modified Period 1 Average shall be combined with the Period 2 Average and the total divided by two, to determine the participant’s Modified Average Account Balance.
The Settlement Administrator shall then determine the total settlement payment available to each Class Member by calculating each such participant’s pro-rata share of the Net Settlement fund based on his or her Modified Average Account Balance.
To the extent a participant has more than one account in the Plans, the Settlement Administrator shall calculate the proportionate share of the total settlement distribution available to the participant (rounded to the nearest dollar or smaller increment, as determined by the Settlement Administrator) that shall be allocated to each of the participant’s accounts, based upon the most recent quarter-ending balance in each such account.
There are approximately 70,683 Class Members.
Note that if you are an alternate payee pursuant to a Qualified Domestic Relations Order, your portion of the settlement will be distributed pursuant to the terms of that order.
Proof of Purchase
N/A.
Claim Form
Claim Form Deadline
09/12/2016
Case Name
Karolyn Kruger M.D., et al. v. Novant Health Inc., et al., Case No. 14-cv-00208 in the U.S. District Court for the Middle District of North Carolina
Final Hearing
09/23/2016
Settlement Website
www.Novant401kSettlement.com
Claims Administrator
Novant 401(k) Settlement Administrator
PO Box 2002
Chanhassen, MN 55317-2002
855-720-1156
Class Counsel
SCHLICHTER BOGARD & DENTON
Defense Counsel
Charles C. Jackson
Christopher J. Boran
Emily A. Glunz
MORGAN LEWIS & BOCKIUS LLP
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6 thoughts onNovant Health 401(k) Class Action Lawsuit Settlement
I think I was part of this novant lawsuit, but never heard. I remember even getting a
Postcard to keep my address current?
I lost my form, and it’s past the deadline, is it too late?
Got mine today!!
do we have to roll this over into an ira account?
Got mine today
When do we expect to receive funds?