Barnabas Health Inc. agreed to pay $1.75 million to settle an ERISA lawsuit filed against the health provider and its fiduciaries by two participants in two Barnabas retirement plans.
The preliminary agreement, which requires court approval, was filed Monday in a U.S. District Court in Newark, N.J. The participants sued in September 2020 alleging several ERISA violations, including the failure of the plans' fiduciaries to consider offering better and/or cheaper investments in the plans' lineups and their failure to make sure each investment was prudent according to ERISA standards.
Barnabas Health asked U.S. District Judge Kevin McNulty to dismiss the complaint, but Mr. McNulty ruled in favor of the plaintiffs in McGowan et al. vs. Barnabas Health Inc. et al.
The parties met with a mediator in February this year, leading to the preliminary settlement agreement, which covers the plans' participants since Sept. 23, 2014.
"Defendants strongly dispute plaintiffs' allegations, maintain that the plan has been prudently managed throughout the relevant period, and deny liability for the alleged ERISA violations," the settlement document said.
"The settlement in this action comes at an opportune time given, if the litigation continues, there would be substantial expense to the parties associated with necessary factual and expert discovery and assorted motion practice," the document said.
As of Dec. 31, 2020, the West Orange, N.J.- based RWJBarnabas Health 401(k) Savings Plan and the RWJBarnabas Health 403(b) Savings Plan had $2.1 billion and $1.2 billion in assets, respectively, according to the most recent Form 5500 filings.