A federal court judge in Concord, N.H., has rejected a petition by the Dartmouth-Hitchcock Clinic, Lebanon, N.H., to dismiss a lawsuit filed by former employees who alleged two clinic retirement plans violated ERISA due to charging high fees and retaining poorly performing investments.
"The court finds persuasive the reasoning of the other First Circuit district courts, which have allowed to move forward complaints that are substantially and materially similar to this complaint," Chief Judge Landya B. McCafferty wrote on Feb. 10, ordering a pretrial conference to take place on March 13.
"The court is not therefore persuaded to deny plaintiffs the opportunity for discovery," the judge wrote in Adams et al. vs. Dartmouth-Hitchcock Clinic et al. "Defendants' further argument that plaintiffs lack standing as to allegations about certain investment funds that support their duty of prudence claim has no merit at this early stage."
The 1st U.S. Circuit Court of Appeals covers federal courts in Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico.
The plaintiffs sued in March 2022 accusing the clinic and plan fiduciaries of "failing to objectively and adequately review the plans' investment portfolios" with respect to cost for the 403(b) plan and 401(a) plan. "Defendants did not adhere to fiduciary best practices to control the plans' costs," said the lawsuit, which is seeking class-action status.
The Dartmouth-Hitchcock Retirement Plan, a 401(a) plan, had assets of $1.07 billion, and the Dartmouth-Hitchcock Employee Investment Plan, a 403(b) plan, had assets of $1.13 billion, both as of Dec. 31, 2021, according to the latest Form 5500s.