CHS sued over alleged mismanagement of retirement plan

A group of participants in Community Health System's 401(k) plan sued the Franklin, Tenn.-based system and record keeper Principal Financial Group, according to Pensions & Investments.

The lawsuit, filed Aug. 8, alleges CHS offered "excessively expensive and poorly performing index funds in the plan that were managed by Principal."

"The marketplace for index funds is highly competitive, with several companies offering index fund products that track benchmarks indices with a high degree of precision, while charging very low fees," states the complaint. "However, the CHS defendants did not give any serious consideration to these competitive index fund offers in the marketplace, and instead used Principal's proprietary index funds, despite fees that were several times higher than marketplace alternatives that tracked the exact same index."

The plan participants claim CHS breached its fiduciary duties under the Employee Retirement Income Security Act.

"Given the high fees and history of poor performance of Principal's index funds, a prudent fiduciary acting in the best interests of the plan's participants would have removed these index funds from the plan and replaced them with more competitive marketplace alternatives," states the complaint. "The CHS defendants' failure to do so has cost participants millions of dollars in excessive fees and lost investment returns."

Regarding the lawsuit, a spokesperson for Principal emailed the following statement to Pensions & Investments: "We disagree with the allegations in this lawsuit and will vigorously contest them. Principal is one of many companies in the industry that have had lawsuits filed against them making these kinds of claims."

The plaintiffs are seeking to recover losses caused by defendants' alleged fiduciary breaches, prevent further mismanagement of the 401(k) plan and its investments, and equitable relief provided by ERISA.

Access the full Pensions & Investments article here.

More articles on legal and regulatory issues:

Michigan health system can't stop nurse's race bias case
Former employee allegedly sold 93 guns purchased by Georgia hospital
Ohio physician charged with murder sues Trinity Health over defense costs

© Copyright ASC COMMUNICATIONS 2019. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Top 40 Articles from the Past 6 Months