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Compliance July 13, 2023
403(b) Suit Against Wake Forest Health Center Settled for $3.8M
Settlement comes about two years after initial complaint of fiduciary negligence and excessive fees.
Reported by Alex Ortolani
Plaintiffs in a lawsuit against the 403(b) managers for Atrium Health Wake Forest Baptist, previously known as Wake Forest University Baptist Medical, reached a tentative settlement for $3.8 million, according to a district court filing on Monday.
After “arm’s length negotiations and numerous exchanges of memoranda and discovery,” the parties reached an unopposed motion to approve the payment to the participant class, according to the filing in the Middle District of North Carolina. Wake Forest’s 403(b) plan had $3 billion in assets and 31,258 participants at the end of 2021, according to its Form 5500.
The original complaint was filed in June 2021 alleging fiduciary negligence against the medical center’s retirement benefit committee and board of directors.
The plaintiff’s, which were represented by law firm Capozzi Adler PC, alleged that many of the mutual funds in the retirement plan were more expensive than comparable funds found in similar sized plans. The complaint also alleged that plan fees were excessive with comparably sized plans who have “substantial” bargaining power with recordkeepers.
The defendants had sought to dismiss plaintiffs’ claims on the grounds of failure to state a claim and failure to state a claim upon which relief can be granted, according to court documents.
In a September 2022 decision, District Court Judge William Lindsay Osteen, Jr., allowed the lawsuit to proceed, finding that plaintiff’s “should be afforded an opportunity to conduct discovery.”
After what plaintiff’s attorneys called “a year and a half of hard-fought litigation,” including a third-party mediator, the parties reached the proposed settlement. Attorneys’ fees are capped at one-third of the settlement total, according to the filing.
Atrium Health Wake Forest Baptist did not respond to request for comment about the proposed settlement.
