Teva Pharmaceuticals USA Inc. agreed to pay $2.6 million to
settle claims by current and former participants in the company's 401(k) that
plan fiduciaries violated ERISA by failing to reduce fees and to offer less
expensive investment options that are similar to existing ones.
The agreement, which requires court approval, was filed
Wednesdayin U.S. District Court in Philadelphia.
"Defendants strongly dispute the claims asserted in the
action and deny that they ever engaged in any wrongdoing, violation of law or
breach of duty, said the settlement document in the case of Pinnell et al. vs.
Teva Pharmaceuticals USA Inc. et al.
"Further, named plaintiffs would face an uncertain
outcome if the action were to continue," the document said. "Although
the court denied defendants' motion to dismiss the action, this case was far
from over."
The document added that "continued litigation could
result in a judgment in favor of the defendants and against the named
plaintiffs and class."
The plaintiffs filed suit in December, alleging that plan
fiduciaries should have considered offering collective investment trusts
instead of mutual funds, saying that the collective investment trusts were
cheaper than comparable existing mutual fund options. They said the plan should
have offered lower-cost share classes of mutual funds that were the "exact
same investment" as options in the plan.
Teva Pharmaceuticals USA Inc., North Wales, Pa., is a wholly
owned subsidiary of Israel-based Teva Pharmaceutical Industries Ltd. The parent
company isn't a defendant.
The Teva Pharmaceuticals Retirement Plan had assets of about
$2 billion as of Dec. 31, 2019, according to the latest Form 5500 filing.
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