A federal district court in Georgia refused to dismiss a 401(k) lawsuit filed against the Columbus Regional Healthcare System, and it cited the Supreme Court's ruling last week in Hughes v. Northwestern University in its decision.
The Supreme Court overturned a lower court's dismissal of the lawsuit against Northwestern, ruling that the lower court had put too much weight on the Northwestern plans’ inclusion of some low-cost options as a sign that the plans' fiduciaries abided by their duties under the Employee Retirement Income Security Act.
The lawsuit filed against the North Carolina-based Columbus Regional Healthcare System also cited breaches of the organization's fiduciary duties to its retirement plan similar to those alleged in the Northwestern case, including offering the retail share classes of mutual funds instead of identical, but lower-cost, institutional shares; selecting and retaining underperforming funds; and overpaying for record-keeping services.
In its decision, the Georgia court “also rejected defendant’s argument that plaintiffs’ claims should be dismissed in part because the plan offered a variety of investment options that participants could select, including lower-cost passive investment options,” according to a blog from the Proskauer law firm. “The district court explained that Hughes rejected this exact argument in holding that a fiduciary’s decisions are not insulated merely by giving participants choice over their investments and that fiduciaries have a continuing duty to monitor plan investments.”
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