Hospital group settles 403(b) lawsuit for $2 million

A Massachusetts-based hospital group is among the latest to settle a lawsuit over retirement plan fees, agreeing to a payout of $2 million last week.

Southcoast Hospitals Group is one of many retirement plan sponsors targeted last year in class-action litigation brought by law firm Capozzi Adler. The firm filed a case nearly a year ago, alleging the plan sponsor breached its fiduciary duty by not selecting the lowest-fee share classes of mutual funds for its investment menu and allowing administrative costs that were higher than necessary. The plaintiffs also alleged the roughly $900 million plan should have included other, lower-cost funds with stronger performance records.

A court must approve the proposed settlement. The case was filed in U.S. District Court in Massachusetts.

According to a court filing made Nov. 19, the hospital group disputes the allegations, while agreeing to the settlement. The agreement would permit a third of the settlement to go toward attorneys’ fees, or $666,667.

“The settlement represents approximately 45% of the total estimated likely damages of $4.4 million based on plaintiffs’ allegation of defendants’ failure to utilize the lowest cost share classes of funds in the plan as well as failure to pay per participant record-keeping costs of no more than $35 per participant,” the court filing stated.

Between 2014 and 2019, the per-participant annual record-keeping costs in the plan ranged from $104 to $127, according to the complaint.

The lawsuit pointed to five funds on the menu that had lower-fee share classes available, although the plan switched to the cheaper options for at least three of them in 2019 and 2020. Those changes were “too little too late, as the lost savings to plan participants had already been baked in,” the complaint stated. “The plan should have changed to the lower share classes as soon as they were available.”

The post Hospital group settles 403(b) lawsuit for $2 million appeared first on InvestmentNews.

Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.

Andrew Vincent
Andrew is half-human, half-gamer. He's also a science fiction author writing for BleeBot.
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