A participant in a 403(b) plan offered by Cape Cod Healthcare Inc. has sued the company and plan fiduciaries alleging several ERISA violations.
"Defendants limited the plan's participants to low-performing and/or high-cost investment options," said the complaint in the case of Somers vs. Cape Cod Health Inc. et al. filed Dec. 1 in a U.S. District Court in Boston.
The lawsuit, which seeks class-action status, also alleged that the plan charged "unreasonable" record-keeping fees.
"The plan could have obtained record-keeping services of the same or better quality at a lower cost," said the lawsuit, contending that plan executives failed to use the plan's asset size or to capitalize on competition among record keepers to get a better deal.
"Defendants also failed to prudently select and monitor the plan's investment options," the lawsuit said. "In comparison to options in similarly sized plans, the plan's investments were more expensive and returned less than comparable options found in similarly sized plans."
An executive at Cape Cod Healthcare wrote in an email that her company had not yet been served with the complaint. "We are confident in our business practices, including the management of our 403 (b) partnership plan, and look forward to defending this case in court," wrote Julie Badot, executive director, marketing communications and content strategy.
The Cape Cod Healthcare 403(b) Partnership Plan, Hyannis, Mass., had assets of $770.4 million as of Dec. 31, 2022, according to the latest Form 5500.