Participants in two defined contribution plans sponsored by the University of Maryland Medical System have sued the Baltimore-based university health-care system for breaching its fiduciary duties in violation of ERISA, according to a complaint.
Lead plaintiffs Martin P. Moler, John T. Czahor and Kathleen D'Ascenzo said in a lawsuit filed July 22 in federal court in Baltimore that sponsors of the $399 million University of Maryland Medical System 401(a) Defined Contribution Plan and the $462 million UMMS Voluntary 403(b) Plan failed to select the cheapest and best-performing investment options available and didn't properly monitor the plans' investment options.
The suit also contends that the defendants failed to ensure that Prudential Financial Inc., the plans' record keeper, wasn't charging excessive fees.
In addition, the plaintiffs also allege that the plan sponsors used GoalMaker, an "abusive" asset allocation service offered by Prudential that steered participants' investments into "obscenely high-fee, chronically underperforming" investment options that paid Prudential kickbacks.
"Defendants could have and should have easily stopped the GoalMaker abuses at any time ... (but) took no action to protect the plans' participants retirement savings," the suit said.
Prudential is not a defendant in the case.
The suit charges that the "defendants' actions and inactions ... cost the plans and their participants millions of dollars of hard-earned retirement savings."
"We do not believe that there is any merit to the current claims," UMMS spokesman Michael Schwartzberg said in an email.
"UMMS, and/or its designated representatives, routinely monitors the various investment offerings and educational tools offered to its retirement plan participants," he said. "This process ensures that any fees paid by participants are reasonable and all services and investment offerings are in the best interests of the participants."
Laura Kavanagh, a spokeswoman for Prudential, could not be immediately reached for comment.
