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Kaleida Health 403(b) and 401(k) Breach of Fiduciary Duties Class Action

This class action brings suit against Kaleida Health, its Board of Directors, its Retirement Plan Committee, and a number of related individuals, under the Employee Retirement Income Security Act (ERISA). The complaint alleges that these defendants breached their fiduciary duties to the company’s retirement plans by “incur[ring] expenses that were excessive, unreasonable and/or unnecessary.”

The class for this action is all participants and beneficiaries of the plan, at any time on or after October 11, 2012, excluding the defendants and fiduciaries of the plans.

Kaleida Health is a not-for-profit company; the complaint calls it “the largest healthcare provider in Western New York[,]” offering hospitals, long-term care facilities, clinics, school health facilities and home health care services. The company is the sponsor of the 403(b) and 401(k) plan at issue in this case.

According to the complaint, the company, its Board of Directors, and the Retirement Plan Committee are all fiduciaries of the plan. ERISA requires that the fiduciaries fulfill the duties of prudence and loyalty, acting solely in the interests of the participants and beneficiaries of the plans.

However, the complaint alleges that the fiduciaries of the plans did not fulfill their duties. First, it alleges that they did not do their best to minimize fees and expenses. The plans paid fees for trustees, recordkeeping, administration, investment management, brokerage, and other services. The complaint claims that the fees “are, and have been, unreasonable and excessive, especially in light of the Plans’ size and asset value.”

This brings up a second point, that the plans are relatively large, meaning that they had bargaining power to reduce fees for these kinds of services.

Prudence is required in the selection of investment options for the plans, and the complaint alleges that the defendants failed in this regard as well: “Defendants impaired participants’ returns by only offering actively managed retail class mutual funds as investment options instead of identical investor class mutual funds with lower operating expenses.” The investment options for one set of mutual funds chosen required the payment of 12b-1 fees, when other funds were available without those fees, the complaint asserts.

The complaint says the defendants “failed to ensure that any delegated tasks were being performed prudently and loyally” and did not “properly undertake the requisite monitoring and supervision of fiduciaries to whom they had delegated responsibilities.”

Finally, the complaint says the defendants “failed to discharge their fiduciary duties with the requisite expert care, skill, prudence, and diligence. Defendants enabled other fiduciaries to commit breaches of fiduciary duties for which Defendants are liable.”

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Kaleida Health 403(b) and 401(k) Breach of Fiduciary Duties Complaint

April 23, 2021

This class action brings suit against Kaleida Health, its Board of Directors, its Retirement Plan Committee, and a number of related individuals, under the Employee Retirement Income Security Act (ERISA). The complaint alleges that these defendants breached their fiduciary duties to the company’s retirement plans by “incur[ring] expenses that were excessive, unreasonable and/or unnecessary.”

Kaleida Health 403(b) and 401(k) Breach of Fiduciary Duties Complaint

Case Event History

Kaleida Health 403(b) and 401(k) Breach of Fiduciary Duties Complaint

April 23, 2021

This class action brings suit against Kaleida Health, its Board of Directors, its Retirement Plan Committee, and a number of related individuals, under the Employee Retirement Income Security Act (ERISA). The complaint alleges that these defendants breached their fiduciary duties to the company’s retirement plans by “incur[ring] expenses that were excessive, unreasonable and/or unnecessary.”

Kaleida Health 403(b) and 401(k) Breach of Fiduciary Duties Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plan Mismanagement