VCA Inc., which operates a chain of veterinary hospitals, is being sued over its former 401(k) plan, with plaintiffs in the proposed class action alleging excessive administrative fees.
In the case filed last Monday in U.S. District Court for the Central District of California, law firms Ahdoot & Wolfson and the Roberts Law Firm claim that VCA breached its duty of prudence and failed to monitor fiduciaries.
Between 2015 and 2020, the record-keeping fees paid by participants annually were as high as $105, while some comparably sized 401(k)s have annual fees closer to $38, according to the complaint. The higher-than-necessary fee arrangement, which included revenue sharing paid through mutual fund fees to the record keeper, Prudential, was the result of VCA’s not having solicited requests for proposals from vendors, the law firms stated.
“Had defendants conducted an RFP for record-keeping services or merely solicited competitive bids, they would have learned … that other record-keeping providers, as well as Prudential, offered the same or similar record-keeping and administrative services provided by Prudential for less than half of what the plan paid in direct compensation,” the complaint read. “Defendants’ failure to conduct an RFP for many years and during the class period was a breach of their fiduciary duty to prudently monitor plan fees and assure such fees were reasonable, and caused harm to the plan and its participants.”
The plan represented more than 11,600 participants as of the end of 2019 and had more than $563 million in assets. However, the plan was merged last year with the larger Mars Veterinary Health 401(k) Savings Plan, which according to data from the Department of Labor represented about $859 million among 2,400 participants. That followed Mars’ 2017 acquisition of VCA.
VCA, which itself has built a business on acquiring veterinary hospitals, medical imaging equipment and dog daycare centers, did not immediately respond to a request for comment.
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.