National Rural Electric Cooperative Hit With ERISA Complaint; UnitedHealth Finalizes $69M Settlement

Participants of the National Rural Electric Cooperative Association’s retirement plan filed a complaint against the organization alleging years of financial mismanagement and self-dealing in the administration of NRECA’s 401(k) Pension Plan.

Filed in United States District Court for the Eastern District of Virginia by two current plan participants seeking to represent a class of more than 77,000, the complaint claims that NRECA and its fiduciary committee breached their obligations under the Employee Retirement Income Security Act of 1974, costing plan participants millions in excessive administrative fees.

According to the complaint, NRECA ignored clear fiduciary warnings, including a 2012 Department of Labor settlement requiring it to restore $27.3 million to employee benefit plans for similar violations. The complaint argues that rather than making adequate changes, the organization continued to overcharge participants and diverted plan assets to subsidize its own operations.

The complaint also accuses NRECA of manipulating internal cost-sharing structures to shift an increasing financial burden onto the 401(k) plan, while reducing costs to its other benefits programs. The plaintiffs are seeking restitution of lost funds, a reform of plan practices and court oversight to prevent further violations.

The class action marks the third major legal challenge NRECA has faced over its retirement practices in the last 15 years. After restoring $27.3 million to the plan in a 2012 settlement, NRECA also settled a 2019 lawsuit on similar grounds for $10 million.

In the latest complaint, the plaintiffs are asking the court to force NRECA to return the allegedly misused funds and require changes to the plan for improved compliance.

UnitedHealth’s Record Settlement Finalized

In a separate ERISA fiduciary breach case, UnitedHealth Group settled for $69 million a case alleging the health care giant breached its duties to participants in its 401(k) plan and mismanaged participants’ retirement funds. A Minnesota judge finalized the settlement last week, according to a release by Sanford Heisler Sharp McKnight LLP, which represented the plaintiffs.

The complaint was originally filed in 2021 and spent three years in litigation before the settlement was reached at the end of 2024.

The settlement intends to resolve claims that UnitedHealth mismanaged investments in the Wells Fargo Target Fund Suite, hurting more than 350,000 current and former participants in the plan.

“ERISA’s fiduciary standards are strict and exacting,” said Charles Field, a partner in and co-chair of Sanford Heisler Sharp McKnight’s financial mismanagement and ERISA litigation practice group and counsel in the case, in a statement. The decision “underscores the fact that fiduciaries should be held to the highest standards in managing plan participants’ assets.”