A federal appeals court in Denver rejected a petition by current and former participants in a Banner Health 401(k) plan to expand an award issued by a U.S. District Court judge 13 months ago in an ERISA lawsuit.
In May 2020, a U.S. District Court judge awarded plaintiffs $2.3 million in damages and interest regarding their claims that Banner and its fiduciaries failed to monitor investments, allowed excessive record-keeping fees and retained certain poor performing investments.
The judge ruled that Banner had violated its ERISA duty of prudence by failing to monitor its agreement with its record keeper, Fidelity Investments. Fidelity isn't a defendant.
Plaintiffs subsequently filed an appeal with the 10th U.S. Circuit Court of Appeals, Denver, arguing that the district court judge had improperly calculated damages and made several other errors in issuing his ruling following a trial.
They claimed damages should have been $19.4 million based on their expert witness, whose testimony was rejected by the trial court judge as "based on vague and insufficient references to his experience in the 401(k) plan industry," according to a court document.
The three-judge federal appeals court panel unanimously supported the lower court ruling about the damages and other matters on June 11, in the case of Ramos et al. vs. Banner Health et al.
"The district court operated well within its purview in calculating damages and pre-judgment interest," the appeals court judges wrote. ""We also agree with the district court that a run-of-the-mill agreement for record keeping services does not constitute a prohibited transaction under ERISA."
The Banner Health Employees 401(k) Plan had $3.08 billion in assets as of Dec. 31, 2019, according to its latest Form 5500 filing.