FOLLOW US

AmerisourceBergen Corp. must face a proposed class action claiming it allowed its employee 401(k) plan to incur excessive fees for recordkeeping and administrative services, a Kentucky federal judge ruled Tuesday. U.S. District Judge David J. Hale partially denied the drug company's motion to dismiss, allowing the case to move forward.

AmerisourceBergen 401(k) Fee Suit  : Workers Allege Excessive Fees

The lawsuit, filed by four current and former employees—Kenneth Dukes, Mark Gale, Christine Chavis, and David Fly—alleges that AmerisourceBergen violated the Employee Retirement Income Security Act (ERISA) by breaching its fiduciary duties. The plaintiffs argue that from 2017 to 2021, the company’s retirement plan paid an average of $60 per participant in recordkeeping fees, more than twice the amount similarly sized plans paid for the same services. The lawsuit notes that AmerisourceBergen’s plan had over $1.9 billion in assets and 23,600 participants, placing it in a strong position to negotiate lower fees.

The plaintiffs further claim that Fidelity, the plan’s recordkeeper, charged other similar plans only $14 to $21 per participant in recordkeeping fees, making the fees paid by AmerisourceBergen’s plan excessive by comparison.

Judge Finds Allegations Plausible

Judge Hale found the plaintiffs’ allegations plausible enough to proceed. He emphasized that while AmerisourceBergen's arguments about fee comparisons and calculations may hold weight later, they cannot be decided at this early stage of litigation. He acknowledged that ERISA plaintiffs often lack inside knowledge until after discovery and allowed the workers' claims regarding excessive recordkeeping fees to move forward.

"Plaintiffs have provided detailed methodology to explain how they arrived at the RKA fee totals used to support their imprudence claim," Hale wrote. He added that any disputes over the accuracy of those calculations would be better addressed at the summary judgment stage.

Stable Value Fund Claims Dismissed

However, Judge Hale dismissed claims related to a stable value fund in the 401(k) plan, which the plaintiffs alleged underperformed and caused participants to lose millions. The judge ruled that none of the plaintiffs had invested in the fund during the period when it allegedly delivered subpar returns from 2017 to 2022, thus invalidating that part of the claim.

AmerisourceBergen 401(k) Fee Suit  : AmerisourceBergen’s Defense

AmerisourceBergen argued in its November dismissal motion that the fees were reasonable because its plan received different services compared to the supposedly similar plans cited by the plaintiffs. It also claimed that the complaint failed to consider the full compensation paid to recordkeepers, including indirect payments.