Can a prior employer hold my 401k proceeds check until I pay a ';processing fee'; to transfer to personal IRA?

I have a 401k account with a prior employer that I wish to close. I want the proceeds to be sent to my personal, traditional IRA account. My employer is telling me that they will not send the check on to my IRA account until I pay them an $80 ';processing fee.'; They are telling me that this is a fee they are charged by a 3-rd party administrator they use - they are passing this on to me... Can they legally do this? Why should I be paying for a service that they use optionally? Where can I go to get more info on this? Your input is appreciated...