Schlichter, Bogard & Denton, a St. Louis-based law firm, said it reached a tentative settlement with Cigna Corporation and Prudential Retirement Insurance and Annuity Company (PRIAC) in the case of Nolte et al. v. Cigna Corp. et al. The case involves disputes over the handling of the Cigna 401(k) plan, the prudence and level of fees of certain plan investment options, and the sale of Cigna’s retirement business to PRIAC. The firm represented the Cigna 401(k) plan participants and beneficiaries.
Under the tentative settlement, which must be approved by an independent fiduciary and a judge, the defendants will pay a combined $35 million. The net proceeds of the settlement, after court-approved attorney’s fees and expenses of settlement administration have been deducted, will be allocated to participant and former-participant accounts. Payments to class members will begin after the court grants final approval of the settlement.
Jerome Schlichter of Schlichter, Bogard & Denton said that in addition to receiving money to support the employees and retirees’ retirement savings, “Our goal has been to make sure Cigna employees have a state-of-the-art 401(k) plan, and we think this agreement accomplishes that.”
The Nolte plaintiffs allege that the fiduciaries responsible for overseeing the plans breached their legal duties by allowing the plans to pay excessive investment management and other fees while benefiting Cigna. The plaintiffs also claim that Cigna improperly benefited from the sale of Cigna’s retirement business. The parties have litigated the case extensively since February 2007, when the plaintiffs filed their initial complaint (see “CIGNA’s 401(k) Fee Suit Defense: We Obey All Current Laws”).
The parties have filed a motion for preliminary approval of the settlement, according to the firm. As part of the settlement, Cigna has agreed to a variety of initiatives designed to enhance its review of alternatives for the plan and plan participants’ retirement savings. Additionally, Cigna has agreed to continue not to include in the plan’s investment lineup any investment options managed by it or its affiliates, and has agreed to continue to exclude retail class mutual funds from the plan’s lineup. Cigna said it will also engage independent consultants to evaluate and make recommendations regarding certain aspects of the plan’s administration.