Centene Management Corp. is the latest entity to face a lawsuit alleging a breach of fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA).
A plan participant filed a complaint earlier this month in the U.S. District Court for the Northern District of California against Centene Management, a subsidiary of Centene Corp., which serves as the legal sponsor and administrator of certain employee benefit plans. The complaint also names Fidelity Investments Institutional and Fidelity Management Trust Co., the plan’s recordkeeper and trustee.
The lawsuit alleges the companies charged excessive administrative fees, misused forfeiture funds and engaged in prohibited transactions. According to the complaint, Fidelity’s recordkeeping services created a conflict of interest because its affiliate, Fidelity Management Trust Co., served as trustee of the plan’s assets, while a separate affiliate, Strategic Advisors, served as investment adviser to the plan. The complaint claims Fidelity charged participants between $39 and $50 in annual administrative costs for the 2019‑2023 plan years, while comparable Fidelity‑administered plans charged about $3 to $31 per participant.
In addition, the lawsuit alleges Centene used forfeited plan assets to reduce its own plan contributions instead of using the funds to benefit plan participants. The company reportedly disclosed it allocated $40.8 million for these offsets over the five‑year class period, according to the complaint citing the plan’s Form 5500 filings.
This lawsuit is part of a wave of ERISA litigation challenging how employers allocate forfeited 401(k) assets and manage plan costs. In recent years, the number of claims raising issues of excessive administrative or investment fees has increased, especially when participants pay significantly more than in similar plans. Lawsuits also increasingly focus on the use of forfeited plan assets — including allegations that such funds should benefit participants rather than reducing employer contributions or covering plan administrative expenses.
These concerns are echoed in other cases, including a lawsuit against Humana’s retirement plan filed the same day that alleges the company allocated millions in forfeited funds to reduce its own contributions rather than using them to lower participants’ administrative costs.
Conflicts of interest remain a key issue. Many of these cases allege that recordkeepers or trustees who serve multiple roles — such as investment adviser or plan trustee — may make self‑serving decisions that increase costs for participants. While some courts have dismissed forfeiture‑allocation claims, others are more open to them, creating legal uncertainty for plan sponsors, according to an analysis by law firm Mayer Brown.
Experts say plan sponsors should carefully document how fees are charged, how forfeitures are allocated, and how affiliated service providers are managed — especially when plan documents give discretion over how forfeitures are used.
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