Former employees of Sutter Health have sued the Sacramento, Calif.-based operator of hospitals and clinics, alleging ERISA violations in the management of the not-for-profit firm's 403(b) plan.
Sutter's fiduciaries "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," said the complaint filed July 21 in a federal District Court in Sacramento.
The plaintiffs also said that plan executives kept certain investment options "despite the availability of identical or materially similar investment options with lower costs and/or better performance histories," according to the complaint in the case of Sargony et al. vs. Sutter Health et al. The plaintiffs are seeking class-action status.
"Defendants knew or should have known of the existence of cheaper share classes and therefore also should have immediately identified the prudence of transferring the plan's funds into these alternative investments," the complaint said.
A Sutter representative didn't respond to a request for comment. The Sutter Health 403(b) Savings Plan, which represents the mid-December 2018 consolidation of two 403(b) plans, had assets of $3.68 billion as of Dec. 31, 2018, according to the latest Form 5500 report.
