Over the next few weeks, you may be reading, and/or hearing from members, about a variety of attacks against the NEA/OEA and your local membership. The latest of these has risen in the form of a lawsuit by two of NEA's 3.2 million members.
Keller Rohrback has filed a class–action lawsuit against NEA, NEA MB, Security Benefit and Nationwide alleging violations of ERISA (government regulations) in the selection and operation of the NEA Valuebuilder 403(b) program. The suit was filed in the federal courts in Tacoma, Washington on July 11. The “class” currently consists of one member from the Washington Education Association and one from the California Teachers Association.
This was not unexpected. In April, Keller Rohrback had a press release announcing their investigation of the NEA Valuebuilder program. NEA MB believes it has followed the law, from Request For Proposal (RFP) to management of the NEA Valuebuilder program. Being right does not always prevent these types of suits.
This lawsuit argues that ERISA should cover the offering of investment vehicles by the Association's member benefits organization for governmental employers, such as school districts, to use in their 403(b) offerings. Keller’s theory would expand the application of ERISA well beyond generally-accepted interpretations.
In connection with its ERISA-based claim, the lawsuit, which has been reported on in The New York Times and The Los Angeles Times, argues that Security Benefit and Nationwide were selected because of revenue considerations.
Revenue to NEA MB is not a focal point in selecting the suppliers. For example, Security Benefit was selected following an extensive RFP process (38 companies received the RFP, 12 responded with proposals, eight were selected for interviews, five finalists were identified and, from the five, Security Benefit was selected). The selection was based on Security Benefits’ 30 years of experience in the K-12 marketplace, willingness to develop new products and their ability to provide a broad-based distribution operation to respond to the member identified need for face-to-face guidance.
The money NEA MB received from Nationwide and from Security Benefit is used to pay NEA MB’s cost to provide services for the NEA Valuebuilder Program, including national and state advertising, creative development, production and media space, affiliate relations support, quality assurance oversight and member advocacy. If NEA MBC did not provide these services, Security Benefit, as Nationwide before them, would have to find these services elsewhere.
No NEA dues dollars are used to support the NEA Valuebuilder program or any NEA Member Benefits program, and NEA MB does not pay NEA royalties or dividends; the funds received by NEA MB are used to support the NEA Member Benefits programs and to provide the oversight, quality assurance and marketing for these programs.
The NEA Valuebuilder Program has always been managed in the best interests of members. NEA Member Benefits will be fighting this suit vigorously.
It is not surprising this issue has come up just as we begin the new membership campaign. I want you to know that we will provide you with updated information so you may share it with your members.
If you have any questions, please contact your staff team members, or me at the OEA office firstname.lastname@example.org or 405-523-4360.
Thanks for all you do.