A federal judge in Los Angeles has refused to dismiss an ERISA lawsuit against Cedars-Sinai Medical Center by a former employee who said its 403(b) plan retained poor-performing investments and paid excessive fees for investments and for record-keeping administrative services.
The former employee sued in June 2023 — and later amended his complaint — saying that the high record-keeping fees weren't worth the types of services that he said weren't unique or greater than comparable services offered by other providers.
The plaintiff accused the plan of charging high fees for mutual funds compared to similar funds with lower share classes in Zimmerman vs. Cedars-Sinai Medical Center et al.
The plaintiff also said plan executives should have replaced a stable value fund offered by the plan's record keeper, Voya Financial, arguing that executives didn't examine the marketplace for cheaper options. Voya isn't a defendant.
U.S. District Court Judge Josephine L. Staton on Feb. 18 denied the defendants' motion to dismiss, saying the plaintiff had provided sufficient information to support his claim that defendants violated ERISA's duty of prudence. "Zimmerman's allegations are sufficient to establish an injury" and show that he has standing to sue, Staton wrote.
Because the judge declined to dismiss the duty-of-prudence claim, she also declined to dismiss the plaintiff's claim that defendants failed to monitor plan activities.
Cedars-Sinai Health System 403(b) Retirement Plan, Los Angeles, had $1.9 billion in assets as of Dec. 31, 2022, according to the latest Form 5500.
