Participants in a 401(k) plan and a 403(b) plan run by Allina Health System, Minneapolis, have announced a proposed settlement in an ERISA lawsuit in which Allina will pay $2.4 million to address breach-of-fiduciary-duty allegations.
The proposed settlement, which requires court approval, was filed Oct. 16 in a U.S. District Court in Minneapolis in the case of Larson et al. vs. Allina Health System et al. Allina denies any liability or wrongdoing, the settlement notice said.
The participants filed a class-action suit in August 2017, arguing that plan executives violated their fiduciary duties by making an agreement with Fidelity Management Trust resulting in many Fidelity investments "instead of making selections based on whether the fund was a prudent investment," the document said. Fidelity Investments, the plans' record keeper, was not a defendant.
The participants alleged that the plans' lineups had too many expensive options — more than 300 mutual funds — and that the defendants failed to adequately monitor these options. They said plan executives failed to monitor investment management fees and record-keeping fees.
Settlement negotiations began in November 2018. The parties reached an agreement in principle in April, but it took "several weeks of negotiations" to complete the agreement, the document said. One-third of the settlement fund will be apportioned to attorneys' fees pending court approval.
The Allina 401(k) Retirement Savings Plan had $1.8 billion in assets and the Allina 403(b) Retirement Savings Plan had $909 million in assets, both as of Dec. 31, 2018, according to the latest Form 5500 filings.