Fidelity, Centene Face ERISA Suit for Excessive Fees, Misused Forfeitures

A participant in the Centene Management Corp. Retirement Plan filed a complaint against Centene Management and Fidelity—the plan’s recordkeeper and trustee—alleging multiple breaches of their fiduciary duties.

The complaint, Clark v. Centene Corp. et al., filed in U.S. District Court for the Northern District of California, alleges a breach of fiduciary duty under the Employee Retirement Income Security Act for charging excessive administrative fees, misusing forfeitures and engaging in prohibited transactions.

According to the complaint, Fidelity’s recordkeeping services to the managed health care provider’s plan created a conflict of interest because its affiliate, Fidelity Management Trust Co., served as trustee of the plan’s assets, while Fidelity’s separate affiliate, Strategic Advisors, served as investment advisers to the plan.

The complaint alleges that Fidelity charged participants between $39 and $50 in annual administrative costs for the 2019 through 2023 plan years. Conversely, comparable plans using Fidelity had costs of about $3 to $31 per participant, according to the complaint.

For example, the complaint notes three Fidelity plans—the CBRE 401(k) Plan, Disney Savings and Investment Plan, and Providence Health & Services 403(B) Value Plan—paid fees that were comparatively lower than Centene Management’s plan.

According to the lawsuit, Centene also misused forfeited plan assets to reduce its own employer contributions, instead of utilizing those funds for the benefit of plan participants. The company disclosed that it allocated $40.8 million for these offsets over the five-year class period, according to the complaint, citing the plan’s Form 5500 filings.

In July, the Department of Labor sided with employers in a similar case by filing an amicus brief arguing that plan sponsors can use forfeitures to offset future contributions or to reduce administrative expenses.

The complaint further claims that Fidelity’s various roles have led to self-serving agreements that have increased costs for plan participants. According to the complaint, the actions of Centene and Fidelity prioritized their own gains, thus constituting a prohibited transaction.

Centene and Fidelity did not return requests for comment.

The Centene Management Corp. Retirement Plan had more than $4.7 billion in assets with approximately 67,000 plan participants in 2024, according to the plan’s most recent Form 5500 filing.