Mutual of Omaha settles ERISA lawsuit for $6.7 million

Mutual of Omaha has agreed to settle a lawsuit brought by its own retirement plan participants for $6.7 million, court records filed this week show.

The firm, along with its United of Omaha Life Insurance Company subsidiary, was sued in early 2018. The plaintiffs in the class-action case alleged that the firms mismanaged their 401(k) plans by choosing United as an investment and administrative provider, and consequently receiving excessive revenue from plan participants.

The companies allegedly engaged in self-dealing, as a separate account in the plans charged additional fees beyond the costs of the underlying mutual funds, court records state. Further, the guaranteed interest account in the plan’s general account was provided by United, rather than an unconflicted third party, the plaintiffs wrote.

Mutual of Omaha and United disputed the allegations in court. The settlement helps avoid further expense and burden of ongoing litigation, a company spokesperson wrote in an email.

“As the settlement agreement indicates, Mutual of Omaha denies all allegations of wrongdoing asserted in this lawsuit,” the statement read. “By settling the case, money that would have been spent to cover legal fees and expenses may now be paid to current and past participants in our 401(k) plans. Mutual of Omaha is proud of its ongoing commitment to provide a valuable suite of benefits to its employees, including its 401(k) plans.”

Among other defense strategies, the firms stated that at least some of the alleged breaches of fiduciary duty would have occurred more than six years before the lawsuit was filed, falling outside of the Employee Retirement Income Security Act’s statute of repose.

The two plans in the lawsuit, the Mutual of Omaha 401(k) and the Mutual of Omaha 401(k) Long-term Savings Plan, represented more than $900 million in assets among about 8,600 participants as of the end of 2018, data from the Department of Labor show.

The total $6.7 million settlement payment, if approved by the court, would include up to $2.2 million in attorneys’ fees and as much as $10,000 for each of the three named participants in the suit, in addition to payments for the affected class members.

The case was filed in U.S. District Court in the District of Nebraska. Law firms Schneider Wallace Cottrell Konecky and Berger Montague, both of which have extensively been involved in 401(k) litigation in recent years, represent the plaintiffs. Law firm Morgan Lewis & Bockius represents Mutual of Omaha in the litigation.

The post Mutual of Omaha settles ERISA lawsuit for $6.7 million appeared first on InvestmentNews.

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