A federal judge in Boston has denied a petition by Mass General Brigham Inc. to dismiss a lawsuit against the health care system filed by former retirement plan participants who allege mismanagement in violation of ERISA.
"Plaintiffs have sufficiently stated their claims of breach of duty of prudence and failure to monitor" fiduciaries, wrote U.S. District Court Judge Angel Kelley in her rejection of a motion to dismiss in the case of Norton et al. vs. Mass General Brigham Inc. et al.
The former participants sued in January 2022 — and later amended their complaint — saying the Consolidated 403(b) Program of Mass General Brigham and Member Organizations suffered from excessive record-keeping fees as well as inadequate monitoring of investment performance and investment fees.
"Their actions were contrary to actions of a reasonable fiduciary," said the lawsuit, which is seeking class-action status.
Mass General Brigham Inc. is the parent organization of five Massachusetts hospitals, including Massachusetts General Hospital and Brigham and Women's Hospital.
"Defendant highlights cases from other circuits in which claims of a breach of prudence based on excessive recordkeeping fees required more precise factual allegations to demonstrate that the services of the comparator plans are like the plan at issue," the judge wrote. "In the absence of First Circuit authority that directly addresses the question, this court is persuaded by the trend within the First Circuit's district courts of allowing similar complaints to survive motions to dismiss and proceed to discovery."
The 1st U.S. Circuit Court of Appeals covers federal district courts in Massachusetts, Maine, New Hampshire, Rhode Island and Puerto Rico.
Consolidated 403(b) Program of Mass General Brigham and Member Organizations, Somerville, Mass., had assets of $12.38 billion as of Sept. 30, 2021, according to the latest Form 5500.