Life Insurance Lewisville Company Mutual of America Settles Lawsuit
Life insurance Lewisville company Mutual of America Life Insurance Co. recently agreed to settle a lawsuit by current and former participants in a 401(K) plan who alleged ERISA violations regarding record-keeping fees as well as the use of proprietary investments in the defined contribution plan. The amount they agreed to pay was a staggering $2.75 million, which now must be approved by a U.S. District Court. Mutual of America Life Insurance Co. had $471 million in assets as of December 31, 2021.
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Many life insurance companies in Lewisville will undoubtedly use Mutual of America as a cautionary tale of internal practices. According to the Pensions & Investments report, Mutual of America was sued in September 2022, arguing “that the 401(K) play was filled with Mutual of America Life Insurance’s own investment products that were expensive and/or poor-performing compared with investments in the marketplace.” Mutual of America responded by agreeing to offer non-proprietary investments for at least half of the plan’s lineup within the next three years. “Although defendants dispute the allegations and deny liability for any alleged violations of ERISA or any other law, they do not oppose the relief sought in this motion,” said the settlement document filed by plaintiffs’ attorneys. “While plaintiffs are confident that they would have prevailed on the pending motion to dismiss, there was a risk that the court might have dismissed the claims. And, if the case proceeded to trial, defendants still might have prevailed.”
Rick Thornton, one of the top health and life insurance agents in Lewisville, said it is important for insurers to do business the right way when it comes to the products they offer as well as create balance between their own investment products and non-proprietary investments.
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