Former participants in retirement plans offered by the Sisters of Charity Leavenworth Health System sued the health system and plan fiduciaries accusing them of ERISA violations in retaining a target-date series offered by J.P. Morgan Asset Management.
The plaintiffs contend that the J.P. Morgan SmartRetirement target-date series was an excessively expensive, poor-forming investment when compared with a handful of other target-date series, according to Macias et al. vs. Sisters of Charity of Leavenworth Health System et al., filed Tuesday in a U.S. District Court in Denver.
The plaintiffs are seeking class-action status, saying the class period started June 13, 2017, and will run through a judgment.
The Sisters of Charity Leavenworth Health System merged with Intermountain Healthcare, Salt Lake City, in April 2022.
The three retirement plans cited in the lawsuit — two 401(k) plans and one 403(b) plan — were consolidated through merger and termination in 2021 to form the SCL Health 401(k) Retirement Savings Plan.
"Fees and investment performance during the class period were unreasonable," the lawsuit said. "Defendants breached their fiduciary duties by selecting and retaining … the chronically underperforming JPMorgan SmartRetirement series of target date funds." J.P. Morgan Asset Management isn't a defendant.
The lawsuit compared examples of the J.P. Morgan target-date series to examples from three other providers, looking at three-and five-year returns over several year-end reporting periods. The lawsuit alleged that the mutual fund versions and the collective investment trust versions of the J.P. Morgan target-date series fared poorly in comparison with the three other providers' target-date series.
However, in some of the comparisons cited in the lawsuit, the J.P. Morgan target-date series had higher returns than the three-year and five-year benchmarks, including each five-year return for each year from Dec. 31, 2014, through Dec. 31, 2018.
"We strongly believe this lawsuit is without merit," said Sara Quale, a spokeswoman for Intermountain Healthcare, in an email. "We have full confidence in how all of the retirement plans for our caregivers have been managed."
SCL Health 401(k) Retirement Savings Plan, Broomfield, Colo., had $1.8 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.
