Three former employees have sued the Nebraska Methodist Health System Inc., Omaha, and its retirement plan fiduciaries for alleged ERISA violations in managing a 401(k) plan.
"The plan had substantial bargaining power regarding the fees and expenses that were charged against participants' investments," said the complaint filed Jan. 24 in a U.S. District Court in Omaha. "Defendants, however, did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent."
The plaintiffs in Fitzpatrick et al. vs. Nebraska Methodist Health System Inc. et al. are seeking class-action status. "The plan's fees and performance during the class period were unreasonable," said the lawsuit, defining the period when alleged ERISA violations took place as starting Jan. 24, 2017.
The lawsuit also alleged that plan executives breached their fiduciary duties by choosing and retaining "the chronically underperforming Wells Fargo Target Date Funds." Wells Fargo isn't a defendant.
Plan executives "failed to adequately monitor the Wells Fargo target date suite's performance relative to peer target date funds and indexes during the class period," the lawsuit said. "Annual data documenting the Wells Fargo target date suite's poor performance was readily available to defendants, who were obligated under ERISA to monitor the performance of the plan's investment options and remove imprudent ones."
The health system doesn't comment on pending litigation, a spokeswoman wrote in an email.
The Nebraska Methodist Health System Defined Contribution Retirement Plan, Omaha, had assets of $660.8 million as of Dec. 31, 2021, according to the latest Form 5500.