A federal judge in Omaha, Neb., will allow an ERISA lawsuit by three former employees of Nebraska Methodist Health System Inc. to continue after having previously dismissed the complaint and rejecting allegations that 401(k) plan executives imprudently managed the plan.
"Given the complexity and highly case-specific nature of plausibly pleading an imprudence claim, the court finds justice requires giving the plaintiffs one last bite at the apple," Chief U.S. District Court Judge Robert F. Rossiter Jr. wrote Jan. 31. Three former employees sued the healthcare system, its board of directors, investment committee and unnamed directors and investment committee members in January 2023, seeking class-action status. They alleged the plan violated ERISA by charging excessive record-keeping fees, retaining poor-performing investments and failing to monitor plan fiduciaries.
Rossiter dismissed most of the complaint in August 2023 with prejudice, meaning the plaintiffs couldn't refile in his court. "The plaintiffs do not state claim for breach of fiduciary duty of prudence," he wrote in the case originally known as Fitzpatrick et al. vs. Nebraska Methodist Health System Inc. et al.
However, the judge didn't dismiss the case against the unnamed directors and investment committee members "as they were unknown, had not been served and were 'not presently before the court,'" Rossiter wrote Jan. 31, responding to the plaintiffs' request for reconsideration.
In the case now called Fitzpatrick et al. vs. John Does 1-30, referencing unknown defendants, the judge said plaintiffs could file an amended complaint. He also changed the dismissal designation to "without prejudice" from "with prejudice," adding that plaintiffs could file by Feb. 23.
Nebraska Methodist Health System Defined Contribution Retirement Plan, Omaha, had $582 million in assets as of Dec. 31, 2022, according to the latest Form 5500.