A new lawsuit filed by current and former employees of Novant Health argues that the company’s bad investments and needlessly high fees have collectively lost them millions from their retirement plans, reports charlotteobserver.com.
According to the lawsuit, about 25,000 people belong to Novant’s retirement plan, which has about $1.2 billion in assets. With numbers like these the lawsuit alleges that the hospital retirement plan committee should be able to negotiate lower fees than the ones that are offered to the standard investor. Novant’s retirement plan paid significantly higher rates to invest in mutual funds than other institutional investors, sometimes more than double.
The lawsuit also argues that Novant employees paid higher than necessary fees to companies like to Great-West Life & Annuity Insurance Co., which handled the record-keeping and administrative services for the retirement plan.
The lawsuit references data taken between 2009 and 2010 in which the amount of money paid to Great-West increased from $195,899 to $2.4 million without evidence of any new services provides. Similarly, D.L. Davis & Co took in $3.7 million in 2012 from the plan while providing only “limited services,” argues the lawsuit.
The lawsuit also outlines many financial ties between Derrick L. Davis, the founder of D.L Davis & Co., and Novant Health, including one instance where Davis gave the hospital a gift of $5 million.
Karolyn Kruger, a retired doctor, along with six other former and current employees of Novant Health filed the lawsuit in an effort to bring a class-action suit on behalf of Novant employees.
Kati Everett, spokesperson for Novant, said that the company had not been served with the lawsuit yet and can’t comment, but added that Novant’s retirement plan committee prudently oversees the selection of retirement plans’ investment options and related fees while receiving independent, professional advice in order to manage the fund in the best interest of the plan participants.
Novant, based in Winston-Salem, operates 14 medical centers and greater than 340 clinics across Virginia, Georgia and the Carolines, while employing more than 10,000 citizens at four hospitals in the Charlotte area.
We will keep you updated as this story unfolds.
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