LabCorp Scores Trial Victory in 401(k) Plan Fee Class Challenge

Labcorp defeated a 55,000-person class action challenging the laboratory network’s 401(k) plan fees, according to a decision by a North Carolina federal judge.

LabCorp followed a prudent process when managing its 401(k) recordkeeping fees and monitoring the plan’s investment options, Judge Loretta C. Biggs said.

The company followed industry standard practices by hiring outside advisers, meeting regularly to discuss recordkeeping, and conducting benchmarking studies, Biggs said, declining the plan participants’ invitation to hold that the company was required to seek out competitive bids for 401(k) service providers in order to fulfill its fiduciary duties under the Employee Retirement Income Security Act.

Hundreds of lawsuits challenging retirement plan fees have been filed in federal courts over the past few years. Trials in these cases are relatively rare: Prime Healthcare Services Inc., Yale University, B. Braun Medical Inc., Wood Group US Holdings Inc., and Molina Healthcare Inc. each defeated retirement plan challenges after trial, but in April a jury awarded more than $38 million in damages to participants in a retirement plan administered by Pentegra Services Inc.

In siding with LabCorp, Biggs found plan participants’ expert witnesses unpersuasive and unhelpful, saying they didn’t offer the type of admissible testimony on appropriate 401(k) fee levels that would allow the participants to demonstrate losses to their plan. In contrast, the defendant’s expert analyzed independent data and “adeptly and coherently explained” the relevant terminology, the judge said.

The opinion, issued Tuesday in the US District Court for the Middle District of North Carolina, follows a four-day, non-jury trial conducted in May.

The lawsuit says the retirement plan covering employees of Laboratory Corp. of America Holdings paid annual recordkeeping fees of at least $43 per person, when a reasonable fee would have been no more than $25 per person. Plan participant Damian McDonald also challenges the plan’s retail share class mutual funds, which he says cost more money than identical funds in cheaper share classes.

Biggs declined to dismiss the case in 2023 and certified the dispute as a class action in 2024. She ruled in March that the case could go to trial, saying the dispute turned on conflicting expert opinions about the reasonableness of LabCorp’s 401(k) fee levels and its investment menu.

K&L Gates LLP and Groom Law Group represented Labcorp. Wenzel Fenton Cabassa PA, Norris Law Firm PLLC, and Michael McKay of Scottsdale, Ariz., represented the class.

The case is McDonald v. Lab’y Corp. of Am. Holdings, M.D.N.C., No. 1:22-cv-00680, 8/12/25.