Another excessive fee case is wrapping up, this time involving the $5.6 billion Northwell Health 403(b) Plan. After five years of motions, amendments, and appeals, the parties have agreed to a $2.75 million settlement.
The lawsuit, brought by plan participant Kaila Gonzalez back in 2020, accused Northwell and its plan fiduciaries of allowing excessive recordkeeping fees and hanging onto underperforming investments. While the case was dismissed at one point, it was revived in 2024 with claims centered on recordkeeping fees and the long-term underperformance of a Lazard Fund.
Now, instead of continuing costly litigation, the defendants have agreed to fund a settlement that will be distributed among more than 50,000 current and former participants, beneficiaries, and alternate payees. As usual, attorneys’ fees (expected at one-third of the settlement) and a modest award for the named plaintiff will come out of the total before distributions are made.
The key lesson here is that these cases take time, and they often turn on very specific claims about fees and performance. Even when fiduciaries win early dismissals, plaintiffs can regroup and come back with narrower arguments that survive. For plan sponsors, the takeaway hasn’t changed: monitor fees, benchmark regularly, and don’t let an underperforming fund linger too long. Litigation may drag on for years, but ignoring fiduciary best practices is what invites it in the first place.