I find that the outcome of McDonald v. Laboratory Corporation of America Holdings provides a compelling lesson: courts strongly affirm the importance of demonstrating a prudent, well-documented fiduciary process—even if the plan doesn’t always secure the lowest fees possible.
Case at a glance (as of September 1, 2025): LabCorp, serving approximately 55,000 plan participants with more than $3 billion in assets, faced claims under ERISA of breach of fiduciary duty, specifically for:
Overpaying for record keeping services
Staying in higher-cost investment share classes longer than prudent
Failing to adequately disclose indirect compensation (e.g., float revenue)
Court’s Findings: Process Over Perfection
Recordkeeping Fees The plaintiff argued LabCorp’s fees ($40–$47 per participant annually) exceeded market norms ($20–$25). LabCorp countered by presenting evidence of using an independent consultant (CAPTRUST), issuing RFIs (2017 & 2019), and later benchmarking studies (2021 & 2022). The court concluded this ongoing effort demonstrated a reasoned fiduciary process, consistent with precedent in Tussey v. ABB and DiFelice v. U.S. Airways.
Investment Share Classes The dispute focused on alleged delays in migrating participants into lower-cost institutional share classes. LabCorp demonstrated that eligibility for these classes depended on asset thresholds, and once met, they executed transitions promptly. The court again found their timely action and documentation reasonable under Tibble v. Edison Int’l and Hughes v. Northwestern University.
Float and Indirect Compensation The plaintiff claimed undisclosed float income benefitted Fidelity. LabCorp showed Fidelity had disclosed float arrangements, which were insignificant or rebated after 2018. The court found the plaintiff’s evidence unreliable and concluded LabCorp’s oversight met ERISA standards.
Final Ruling and Its Implications
After a four-day bench trial, the court ruled in LabCorp’s favor, concluding that the company did not breach its fiduciary duties—its process was prudent and well-supported.
The court strongly discounted the credibility of the plaintiff’s expert witnesses—citing their reliance on anecdotal evidence and insufficient data—while elevating LabCorp’s expert (“solid, admissible…probative”) for grounding opinions in independent data and industry standards.
Key Fiduciary Best Practices for Plan Sponsors
From this ruling, it's clear: a rigorous process, not perfection, earns defense in court. Here’s what plan sponsors should prioritize:
Best Practice/ Why It Matters
Benchmark recordkeeping regularly (e.g., RFIs, competitive bids)/ Demonstrates cost-awareness and prudence
Engage independent advisors/ Third-party validation strengthens judgments
Track investment share class eligibility and transitions/ Shows active monitoring and timely action
Document indirect compensation clearly/ Transparency bolsters fiduciary defense
Maintain comprehensive meeting records and minutes/ Serves as documentary proof of deliberations and decisions
Documenting prudent decisions and why they were made is critical: courts value evidence of a thoughtful, ongoing process, even if alternatives at “optimal” cost weren’t selected.
The Parting Glass
I believe the court correctly emphasized fiduciary process over chasing the lowest fee. The LabCorp case underscores that plan sponsors who can show consistent monitoring, expert consultation, and documentation of deliberations position themselves well under ERISA scrutiny. Market conditions and timing may preclude perfect fee optimization—but fiduciary prudence is about diligence, not perfection.
Not a client of Green Retirement, Inc.? If you’d like to review how your plan’s processes align—or audit your documentation—I'd be glad to assist.