Parties in Anthem Fee Suit Get Preliminary Approval of Settlement

Anthem has agreed to pay $23.6 million to settle the lawsuit in addition to non-monetary terms.

The parties in an excessive fee lawsuit filed against the committee that oversees the Anthem 401(k) plan have gotten preliminary approval of a settlement agreement.

Anthem has agreed to pay $23.6 million to settle the lawsuit, which alleged that plan fiduciaries allowed unreasonable expenses to be charged to participants for administration of the plan, and that they selected and retained high-cost and poor-performing investments compared to available alternatives.

The settlement agreement includes additional terms, including that within the first year after final settlement approval, the Anthem 401(k) plan committee will provide the fund fact sheet or similar disclosure that explains the risk of the money market fund option, its historical returns over the past 10 years and the benefits of diversification to current plan participants invested in the plan’s money market fund. 

Also, by the end of the first year, Anthem will engage an individual investment consultant to review the plan’s lineup and make recommendations, including whether to add a stable value fund option to the plan. With the assistance of the investment consultant, Anthem will consider the lowest-cost share class available to the plan for any mutual fund considered for inclusion in the plan, the availability to revenue sharing rebates and the availability of collective investment trusts (CITs) or separately managed accounts.

The settlement agreement also calls for Anthem plan fiduciaries to conduct a request for proposals (RFP) for recordkeeping services for the plan, with a request to providers to include a fee proposal based on a total fixed fee and on a per participant basis.