A U.S. District Court judge in Denver awarded plaintiffs more than $2 million in a fiduciary breach lawsuit against Banner Health, Phoenix, over the investment management of its 401(k) plan.
In the judgment filed May 20, William J. Martinez ruled in favor of the plaintiffs on three of the five counts of the lawsuit and wrote that the plaintiffs are entitled to losses totaling $1.6 million and $687,589 in interest. The plaintiffs had sought $85 million in damages.
The class-action lawsuit filed by Lorraine M. Ramos on behalf of plan participants alleged Banner Health violated its fiduciary duties under the Employee Retirement Income Security Act of 1974 from Nov. 20, 2009, through the judgment date.
Among the allegations were that Banner Health failed to monitor imprudent investment options, retained Fidelity Investments' Freedom Fund target-date funds after they became imprudent to include in the plan's lineup and allowed the plan's record keeper to collect excessive fees.
Mr. Martinez said in the judgment that the court concluded there had been no losses for the period between 2012 to 2017 because Banner Health repaid improperly used assets to the plan plus interest on lost earnings.
As of Dec. 31, 2018, the Banner Health Employees 401(k) Plan had $2.5 billion in assets, according to its latest Form 5500 filing.
Jerome J. Schlichter, senior partner at Schlichter Bogard & Denton, the plaintiffs’ attorney, said in an email, “The court found a serious breach of fiduciary by Banner, and we will move forward with the addition of prejudgment interest, attorneys fees and costs as the court ordered. We are also moving forward with the separate settlement in the case with the investment consultant Slocum.”
Becky Armendariz, spokeswoman for Banner Health, said in an email: “Banner Health overwhelmingly prevailed in this trial. The judge rejected a number of the plaintiffs’ theories and most all of the claimed damages. The low damage award confirms that the plan was appropriately administered by the fiduciaries.”