Three former employees of the Cigna Group have filed suit against the company, alleging it misused forfeited funds in its 401(k) plan in violation of the Employee Retirement Income Security Act, the second case brought against the health care giant in as many months. 

In Adams et al. v. the Cigna Group et al., the plaintiffs claim Cigna and its retirement plan committee misused more than $17 million in 401(k) plan assets over several years to offset company costs, in violation of ERISA. Ahdoot & Wolfson P.C. and the Sharman Law Firm are representing the plaintiffs.

The IRS in 2023, however, reaffirmed its position that 401(k) plan forfeitures can be used to pay plan expenses, reduce future employer contributions or to make an additional allocation to participants. More than 30 cases contesting the use of plan forfeitures have been filed in recent years, with many cases dismissed by federal judges in a variety of jurisdictions; others are ongoing.

Filed in U.S. District Court for the Eastern District of Pennsylvania, the latest complaint accuses Cigna of breaching its fiduciary duties to participants in its 401(k) savings plan. Specifically, the lawsuit alleges that from June 2019 onward, the company used “forfeited” plan assets—funds from employee accounts that became plan assets when workers left the company before fully vesting in employer contributions—to reduce its own matching contributions, instead of applying those funds to cover plan administration expenses, as the plaintiffs claim is required.

The plaintiffs seek to represent tens of thousands of current and former Cigna employees whose retirement accounts were affected. The complaint alleges that Cigna not only misused the forfeited funds, but also failed to prudently monitor the use of plan assets, resulting in millions in lost investment gains and additional out-of-pocket expenses for participants.

Cigna is also accused of engaging in prohibited transactions, per the complaint. The plaintiffs argue that Cigna’s management decisions served its own interests by saving the company money on required contributions, rather than protecting or maximizing the retirement savings of employees.

The lawsuit requests that the court order Cigna to restore the lost funds to the plan, impose personal liability on fiduciaries for any losses and award other appropriate equitable relief. 

In a May complaint in the same district court, other former employees claimed Cigna allowed assets to be invested in funds that had “significantly lower rates of return” than comparable stable value funds that were available, thereby costing participants millions of dollars in returns. That complaint also accused Cigna of violating ERISA by misusing plan forfeitures. 

Cigna Group’s 401(k) has roughly 93,000 participants with $13 billion in assets.

“We are proud of the benefits we offer our employees, including the 401(k) Plan, and we intend to defend our company vigorously against these allegations,” a Cigna spokesperson said in a statement.