In 2016, there was an influx of lawsuits impacting large higher education institutions
, in which eight private universities were sued by their employees seeking class-action status over fiduciary violations of ERISA (Employee Retirement Income Security Act) due to excessive fees and other alleged fiduciary breaches. At that time, some smaller institutions may have assumed that they were safe for the time being – that time would pass before those lawsuits came “downstream” to institutions their size.
There is a new round of lawsuits on the near horizon coming from Houston-based Levin Law Firm, targeting 86 private colleges and universities. You can find Levin’s full notice and the list of institutions here
. The firm’s website states, “together with co-counsel, our law firm is investigating dozens of private colleges and universities for alleged violations of federal pension fund law.” The firm is not only investigating these specific institutions but is also fishing for unhappy 403(b) retirement plan participants from these institutions to contact the firm immediately. They anticipate people will step forward to join the suit.
The issues raised by Levin’s firm are similar to those raised originally in 2016. Levin’s website states, “these institutions of higher learning may have packed their retirement plans with high-cost, poorly performing mutual funds when better and less expensive funds were available. They may have charged college and university employees excessive retirement plan management fees. And they may have failed to monitor the plans’ investments and removed those that performed poorly from the plans.”
What does all this mean for your institution? Eric Paley, ERISA expert and partner at Nixon Peabody, LLC, strongly recommends, “irrespective of whether your institution is named below, the response remains the same. Get your ducks in a row, and conduct a fiduciary gap analysis. Clearly this issue is not going away.” By this he means that your institution must figure out, as an ERISA fiduciary, where your practices and procedures are weak (or perhaps where you have no practices and procedures at all) and will leave you vulnerable in the current litigious environment.
Please contact us
with any questions you might have, or to request a fiduciary policy and procedure check-up. We’re here to help!