Participants in a Norton Healthcare 403(b) plan sued plan executives and officials of the not-for-profit hospital company, alleging breaches of fiduciary duty by offering unnecessarily expensive share classes of mutual funds.
"One of the most common and well-known examples of an imprudent investment is to purchase a more expensive share class of a mutual fund when a less expensive share class is available," said the complaint filed Jan. 22 in U.S. District Court in Louisville, Ky.
The Norton Healthcare Defined Contribution Retirement Plan, Louisville, Ky., had $714 million in assets as of Dec. 31, 2016, according to the complaint. Given the plan's size, "there is no excuse for failing to continuously monitor the plan's investment options to take advantage of share-class discounts," said the complaint in the case of Disselkamp et al. vs. Norton Healthcare Inc. et al.
Between 2012 and 2016, plan executives "repeatedly failed … to monitor the share classes of mutual fund investments and to substitute less expensive share classes," said the complaint, which is seeking class-action status. "As a result, defendants wasted the assets of plan participants, who were forced to pay higher fees than necessary."
A Norton Healthcare executive said in an email Thursday that plan executives acted properly. "Norton Healthcare does not agree with the allegations in the complaint and will vigorously defend this lawsuit in order to protect the assets of the retirement plan for all of its participants," wrote Tom Powell, assistant general counsel and associate vice president.