A federal court judge rejected a $3.9 million settlement of an ERISA complaint between Mercy Health System Corp., Rockford, Ill., and current and former participants in three Mercy Health defined contribution plans.
U.S. District Court Judge Iain D. Johnston rejected the proposal Nov. 24, giving the parties until Dec. 10 to file an amended agreement in the class-action case of Hill et al. vs. Mercy Health System Corp. et al.
The proposed settlement was announced Nov. 5 regarding a complaint that said plan fiduciaries failed to monitor certain investments and that some investments were poor performers. Plaintiffs argued that the fiduciaries could have chosen cheaper funds with better results.
"The proposed preliminary approval order also asks the court to enter a preliminary injunction that would bar class members and their agents, heirs, etc., from asserting any of the claims that are the subject of the settlement agreement against the defendants in any other litigation," the Mr. Johnston wrote. "The court questioned its authority to enter such an injunction."
Citing a fiduciary duty to participants affected by the settlement, "the court is not going to enjoin class members from filing other litigation that may upset this settlement simply to help ensure that this case is removed from its docket," the judge wrote.
"The parties have provided no legal bases for that request nor any facts upon which a proper injunction could be entered," Mr. Johnston wrote.
The three plans — the Mercy Health Corp. Employees Retirement Plan, Rockford Health System Retirement Plan, and Rockford Health Physicians Retirement Plan — had a combined $893 million in assets as of Dec. 31, 2020, according to the plans' most recent Form 5500 filings.