A federal judge in Boston rebuffed a request by Boston Children's Hospital to dismiss an ERISA lawsuit by four former employees.
They sued the hospital and its 403(b) plan fiduciaries in January 2022, alleging that charging "unreasonable" expenses and retaining high-fee, low-performance investments violated the defendants' fiduciary responsibilities.
"Viewed 'as a whole,' plaintiffs' complaint states a plausible claim of breach of fiduciary duties," U.S. District Court Judge Angel Kelley wrote March 15.
The complaint, which is seeking class-action status, also argued that plan fiduciaries should have considered replacing an actively managed target-date series with a passively managed one. Both are available from Fidelity Investments. Fidelity is the plan's record keeper; it isn't a defendant in Monteiro et al. vs. The Children's Hospital Corp. et al.
"Even if there are alternative, reasonable explanations for defendants' conduct, at this stage of the litigation, the facts alleged 'provide a sound basis for comparison — a meaningful benchmark' — suggesting that the active suite underperformed and that the plan was needlessly more expensive than similar plans, which supports a plausible claim that the defendants' actions breached their fiduciary dues," Ms. Kelley wrote.
Children's Hospital Corp. Tax-Deferred Annuity Plan, Boston, had $1.33 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.