A class action is a lawsuit in which one or more plaintiffs sue on behalf of a group of people who allegedly have similar claims. After the parties reached an agreement to settle this case, the Court granted preliminary approval of the Settlement and preliminarily determined that the case should be treated as a class action for settlement purposes. Among other things, this preliminary approval permits Settlement Class Members to voice their support for or opposition to the Settlement before the Court makes a final determination of whether to approve the Settlement. In a class action, the court resolves the issues for all class members.

Plaintiffs filed a class action complaint against Defendant WakeMed on behalf of a class of Plan participants alleging that WakeMed breached its fiduciary duties under ERISA—that is, certain responsibilities under federal law—by selecting and maintaining mutual funds in the Plan that were more expensive than alternative options, and by failing to prudently structure the administrative, recordkeeping, and other Plan expenses. A more complete description of what Plaintiffs allege is in the Complaint, which is available here.

WakeMed denies all Plaintiffs’ claims of wrongdoing or liability against it, and asserts that its conduct was lawful. WakeMed maintains that, at all relevant times, it has acted prudently and solely in the best interests of Plan participants, in accordance with 3 its fiduciary responsibilities under ERISA. Among other things, WakeMed monitors, reviews, and evaluates the Plan’s investment options, their performance and expenses, and the administrative fees paid by the Plan, thus ensuring the Plan offers participants a reasonable, affordable, and diverse array of investment options. WakeMed also has insurance coverage related to the Plan. WakeMed and its insurer have worked together to determine how best to address Plaintiffs’ claims. WakeMed and its insurer are settling the Class Action solely to avoid the expense, inconvenience, and inherent risk and disruption of litigation, particularly as WakeMed continues to care for its patients and community during an unprecedented global pandemic.

The Court has not decided in favor of either side in the case. Beginning in late 2019, Class Counsel began investigating potential claims on behalf of the Settlement Class. In March 2020, Class Counsel requested Plan documents from WakeMed and incorporated information from those documents, along with other facts developed during Class Counsel’s investigation, into a detailed complaint which Plaintiffs intended to file in late August 2020. Before filing the complaint, Class Counsel inquired as to whether WakeMed was interested in discussing a potential resolution prior to both parties engaging in complex and formal litigation. These efforts were followed by prolonged negotiations with WakeMed, including lengthy discussions of the strengths and weaknesses of Plaintiffs’ claims and the parties’ respective positions. The parties then participated in a mediation before a highly respected and experienced mediator, and ultimately agreed on the Settlement. The Plaintiffs and their attorneys believe the Settlement is in the best interests of everyone who participated in the Plan during the Settlement Class Period. Both sides will avoid the significant disruption, cost and risk of lengthy litigation and trial, and the affected current and former Plan participants will get substantial benefits that they would not have otherwise received if Plaintiffs had litigated the case and lost.

The Court decided that everyone who fits the following description is a member of the Settlement Class:

All persons who participated in the Plan (as defined in the Settlement Agreement, to include all defined contribution plans sponsored by WakeMed) at any time during the Settlement Class Period, including any Beneficiary of a deceased person who participated in the Plan at any time during the Settlement Class Period, and any Alternate Payee of a person subject to a Qualified Domestic Relations Order who participated in the Plan at any time during the Settlement Class Period.

If you meet the definition above, you are a member of the Settlement Class.

WakeMed, through its insurer, has agreed to pay $975,000 into a Settlement Fund, which includes amounts for expenses associated with administering the Settlement, taxes, tax expenses, as well as, to the extent required and approved by the Court, attorneys’ fees, expenses, and a service award to Plaintiffs. The amount of each Settlement Class Member’s payment is based on the size of his or her monthly average of end-of-quarter Plan account balances during the Settlement Class Period. As part of the Settlement, WakeMed also agreed to take certain actions in the future with respect to how it will evaluate service providers for the Plan. Specifically, within eighteen (18) months of the Settlement Agreement Execution Date, WakeMed will conduct a request for proposals (“RFP”) for investment advisory services for the Plan. WakeMed has further agreed to initiate RFPs for recordkeeping and administrative services for the Plan on two occasions, the first within thirty-six (36) months of the Settlement Effective Date, and the second within seventy-two (72) months of the Settlement Effective Date. WakeMed will issue these RFPs to at least three qualified service providers. After each RFP, WakeMed may decide to retain the Plan’s current provider of investment advisory, recordkeeping, and administrative services, or may choose to select a different provider. If you are a Settlement Class Member and you are a Current Participant, your payment will be deposited into your Plan account and invested initially in the Plan’s qualified default investment alternative. If you choose to do so, you may then change your investment elections in the same way that you may for the other amounts held in your Plan account. If you are a beneficiary entitled to receive payments on behalf of a Settlement Class Member (a “Beneficiary”), you will receive your payment under the Settlement directly in the form of a check. If you are an alternate payee entitled to receive payments on behalf of a Settlement Class Member pursuant to a Qualified Domestic Relations Order (an “Alternate Payee”), you will receive your payment of the Settlement (pursuant to the terms of your Qualified Domestic Relations Order) directly in the form of a check. If you are an Authorized Former Participant who has filed a Former Participant Claim Form, a Settlement Class Member and you previously participated in the Plan but no longer do so (or you are a Beneficiary or an Alternate Payee of such a Settlement Class Member), then you will receive any payment under the Settlement directly in the form of a check.

Whether you need to submit a claim form to receive your distribution depends on whether you are considered a “Current Participant” or a “Former Participant” Current Participants will automatically receive benefits if the Settlement is Finally Approved by the Court. Former Participants must submit a claim to receive benefits. If you are a Former Participant, you may submit a claim here.

No amount shall be distributed to an eligible Settlement Class Member that is ten dollars ($10.00) or less, because such an amount is de minimis and would cost more in processing than its value. These small amounts will be distributed, with other settlement proceeds, to Settlement Class Members entitled to receive more than ten dollars ($10.00). The total amount of all checks to be written by the Settlement Administrator plus the total amount of all credits that the Plan is instructed to make to Current Participants may not exceed the Net Settlement Amount.

The Settlement Administrator will complete all payment calculations described above within thirty (30) calendar days after the Settlement Effective Date.

After the Settlement Effective Date, the Settlement Administrator will cause the Net Settlement Amount to be allocated and distributed to Current Participants, Authorized Former Participants, and their Beneficiaries or Alternate Payees, in accordance with the Plan of Allocation set forth in Article 6 of the Settlement Agreement and as ordered by the Court. The Settlement Administrator will utilize the quarter-ending account balances invested in the Plan for each Settlement Class Member during the Settlement Class Period to calculate payments to Settlement Class Members. Payments will be calculated as follows:

1. The end-of-quarter balances for the Settlement Class Period of each Current Participant and each Authorized Former Participant are identified for each quarter;
2. All end-of-quarter balances identified in step 1 are summed together for each Settlement Class Member.
3. An average end-of-quarter balance for each Settlement Class Member is calculated for the Settlement Class Period.
4. For each Settlement Class Member, the average end-of-quarter balance of step 3 is divided by the sum of all of the average end-of-quarter balances of all Settlement Class Members for the Settlement Class Period.
5. Each Settlement Class Member will receive the fraction of the total Net Settlement Amount which is calculated in step 4.
6. For purposes of these calculations, a zero should be included as the balance for any quarter during which an individual had no account balance, or did not participate in the Plan, at the quarter-end.

No amount shall be distributed to an eligible Settlement Class Member that is ten dollars ($10.00) or less, because such an amount is de minimis and would cost more in processing than its value. These small amounts will be distributed, with other settlement proceeds, to Settlement Class Members entitled to receive more than ten dollars ($10.00). The total amount of all checks to be written by the Settlement Administrator plus the total amount of all credits that the Plan is instructed to make to Current Participants may not exceed the Net Settlement Amount.

No. If the Court approves the Settlement, you will be bound by it and will receive whatever benefits you are entitled to under its terms. You cannot exclude yourself from the Settlement, but you may notify the Court of any objection you might have to the Settlement.

If you are a Settlement Class Member, you can object to any part of the Settlement, Class Counsel’s request for an award of attorneys’ fees, expenses and Plaintiffs’ awards. To object, you must submit a written statement giving the reasons why you think the Court should not approve the Settlement. The Court will consider your views. Your objection to the Settlement or Class Counsel’s request for attorneys’ fees and expenses must be received no later than December 30, 2021, and must be sent to the Court and the attorneys for the Parties. Please see your Notice for complete instructions.

A Fairness Hearing has been set for January 10, 2022 at 1:00 p.m., before The Honorable James C. Dever III at the U.S. District Court for the Eastern District of North Carolina, 310 New Bern Ave., Raleigh, NC 27601. At the hearing, the Court will hear any comments, objections, and arguments concerning the fairness of the proposed Settlement, including the amount requested by Class Counsel for attorneys’ fees and expenses and the awards to Plaintiffs as the Class Representatives. You do not need to attend this hearing. You also do not need to attend to have an objection considered by the Court.

Note: The date and time of the Fairness Hearing are subject to change by Court Order and may be conducted via conference call, but any changes will be posted on this website.