Hospital group settles 403(b) lawsuit for $2 million

Hospital group settles 403(b) lawsuit for $2 million
Southcoast Hospitals Group is one of many retirement plan sponsors targeted last year in class-action litigation brought by law firm Capozzi Adler.
NOV 23, 2021

A Massachusetts-based hospital group is among the latest to settle a lawsuit over retirement plan fees, agreeing to a payout of $2 million last week.

Southcoast Hospitals Group is one of many retirement plan sponsors targeted last year in class-action litigation brought by law firm Capozzi Adler. The firm filed a case nearly a year ago, alleging the plan sponsor breached its fiduciary duty by not selecting the lowest-fee share classes of mutual funds for its investment menu and allowing administrative costs that were higher than necessary. The plaintiffs also alleged the roughly $900 million plan should have included other, lower-cost funds with stronger performance records.

A court must approve the proposed settlement. The case was filed in U.S. District Court in Massachusetts.

According to a court filing made Nov. 19, the hospital group disputes the allegations, while agreeing to the settlement. The agreement would permit a third of the settlement to go toward attorneys’ fees, or $666,667.

“The settlement represents approximately 45% of the total estimated likely damages of $4.4 million based on plaintiffs’ allegation of defendants’ failure to utilize the lowest cost share classes of funds in the plan as well as failure to pay per participant record-keeping costs of no more than $35 per participant,” the court filing stated.

Between 2014 and 2019, the per-participant annual record-keeping costs in the plan ranged from $104 to $127, according to the complaint.

The lawsuit pointed to five funds on the menu that had lower-fee share classes available, although the plan switched to the cheaper options for at least three of them in 2019 and 2020. Those changes were “too little too late, as the lost savings to plan participants had already been baked in,” the complaint stated. “The plan should have changed to the lower share classes as soon as they were available.”

Latest News

$29B Lido Advisors expands in Utah with Olympus Wealth Management
$29B Lido Advisors expands in Utah with Olympus Wealth Management

The privately backed RIA's newest partner firm brings $850 million in assets while giving it a new foothold in the Salt Lake City region.

Annuities hit new $223B high in H1 2025, LIMRA says
Annuities hit new $223B high in H1 2025, LIMRA says

The latest preliminary data show $117 billion in second-quarter sales, but hints of a slowdown are emerging.

Alaris Acquisitions CEO: AI-driven staff reductions could boost RIA valuations
Alaris Acquisitions CEO: AI-driven staff reductions could boost RIA valuations

CEO Allen Darby sees a coming shift in M&A dynamics as AI eliminates clerical roles at RIAs, leaving buyers and sellers to negotiate who benefits from the added margin.

Private equity in 401(k)s is 'inevitable,' says Meketa Capital CEO
Private equity in 401(k)s is 'inevitable,' says Meketa Capital CEO

Michael Bell explains how the PE push in retirement plans may benefit investors, why warnings around risks may be overplayed, and what it will take to get plan fiduciaries comfortable with private investments.

IRA rollovers from DC plans to hit $1.15T by 2030, LIMRA says
IRA rollovers from DC plans to hit $1.15T by 2030, LIMRA says

Research highlights the dominant role of workplace retirement plans and breaks down the major factors dictating workers' IRA rollover decisions.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.