A federal judge has dismissed a proposed class action lawsuit that accused Centene of mismanaging its employees’ 401(k) retirement plan, ruling the former employee who brought the case did not adequately show she was harmed.
In its July 16 decision, the U.S. District Court for the Northern District of California gave the former employee until Aug. 6 to file an amended complaint.
The lawsuit, filed in November, alleged that Centene chose opaque collective investment trusts over mutual funds, that it allowed the plan’s administrator, Fidelity, to charge excessive fees, and that it used forfeited employee contributions to reduce its own contributions to the plan rather than to cover participants’ administrative costs. The plan has about 67,000 participants and more than $4.7 billion in assets.
The former employee alleged participants paid Fidelity between $39 and $50 each per year from 2019 to 2023, compared with $3 to $31 at comparable plans. On forfeitures, she alleged Centene used around $35 million between 2020 and 2023 to offset its own contribution obligations.
In her ruling, the judge said the employee had not shown the investment trusts caused her any financial harm, and that the plans she pointed to for comparison were not shown to be similar enough to prove Centene’s fees were excessive. She also wrote that using forfeitures to reduce company contributions can sometimes be a reasonable choice, and that the employee didn’t prove that Centene failed to act in the interest of participants.
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