District Court allows ERISA case against University of Maryland Medical to proceed

A federal District Court judge rejected a petition by the University of Maryland Medical System, Baltimore, to dismiss a lawsuit filed by participants in two university retirement plans who alleged multiple ERISA violations.

Baltimore-based U.S. District Court Julie R. Rubin wrote July 13 that all of the plaintiffs' allegations could proceed to trial in Moler et al. vs. University of Maryland Medical System et al.

The original lawsuit, filed in July 2021, accused the university and plan fiduciaries of keeping underperforming investments and failing to investigate investment options based on cost and performance. Plaintiffs also alleged the fiduciaries failed to offer lower-cost mutual fund shares, monitor a separate account, find a better-performing and cheaper stable value fund and monitor record-keeping expenses.

In the fiduciaries' defense against the share-class allegation, for example, Mr. Rubin wrote that the plaintiffs "have alleged facts to support an inference of imprudence" that are sufficient to defeat a motion to dismiss.

As for claims about high fees and poor performance for investment options, the plaintiffs' allegations "support the inference the defendants failed to monitor and remove these historically underperforming funds," the judge wrote.

And as for the record-keeping complaint, "plaintiffs have stated sufficient allegations that defendants failed to monitor fees and that the fees were excessive and unreasonable, amounting to a breach of fiduciary duty," Mr. Rubin wrote.

The UMMS Voluntary 403(b) Plan had $754.9 million in assets and the University of Maryland Medical System 401(a) Defined Contribution Plan had $463.3 million in assets, both as of Dec. 31, 2020, according to the latest Form 5500s. Both plans are based in Linthicum, Md.