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ERISA Litigation Tab: $6.2 Billion

ERISA

A new report notes that large companies have paid out $6.2 billion in 201 ERISA class-action lawsuits since 2000.

And that’s the total of (just) 201 settlements and verdicts since the beginning of 2000 involving corporations in the Fortune 1000, the Fortune Global 500 and the Forbes list of America’s Largest Private Companies.

The case information was assembled by the Corporate Research Project of Good Jobs First as part of the latest expansion of Violation Tracker, which calls itself “a database of corporate crime and misconduct.”

The list of allegations will be familiar to NAPA-Net readers. They include:

  • charging excessive fees or offering overly risky investment options in 401(k) plans;
  • improper investment of pension plan assets in company stock, especially during times of instability;
  • inadequate or misleading disclosure of financial information to plan participants; and
  • mishandling conversions of pensions to cash-balance plans.

And while there are certainly cases on the list involving 401(k) suits, the largest settlement on the list – $480 million – was reached in 2014 in a retiree health benefits suit brought against Daimler AG on behalf of workers at the German company’s U.S. truck manufacturing plants.

Some suits were brought against investment managers or plan trustees rather than the employer. For example, in 2015 Bank of New York Mellon agreed to a $335 million settlement to resolve allegations by multiple pension funds that it deceptively overcharged them on currency exchange rates relating to the purchase of foreign securities.

Apart from Daimler and Bank of New York Mellon, 13 other large corporations have had total ERISA payouts of $100 million or more. Among them are IBM, Foot Locker, Xerox, Bank of America, AK Steel, AT&T and JPMorgan Chase. The industry with the most ERISA payouts is banking, with a total of more than $1.3 billion.

In addition to large for-profit corporations, some major nonprofits, especially health care systems, have had to pay out large sums. Most involve lawsuits alleging that religious institutions improperly claimed that their plans were exempt from ERISA. The biggest settlements have involved Providence St. Joseph Health ($351 million) and Bon Secours Mercy Health ($161 million from two suits).

In many cases the settlement costs are covered in part or wholly by an insurance policy, but Violation Tracker attributes the amount to the corporation or non-profit named in the lawsuit.

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