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Yale-New Haven Hospital Annuity Plan Breach of Fiduciary Duty ERISA Class Action

The defendants in this case are the parties with responsibilities toward the Yale-New Haven Hospital and Tax Exempt Affiliates Tax Sheltered Annuity Plan—that is, Yale-New Haven Hospital, Inc., its Board of Directors, and the plan’s Investment Oversight Committee. The complaint alleges that these defendants breached their fiduciary duties to the retirement plan by permitting high costs, high fees, and poor investment choices, violating the Employee Retirement Income Security Act (ERISA).

The class for this action is all participants and beneficiaries in the Yale-New Haven Hospital and Tax Sheltered Annuity Plan at any time between January 21, 2016 and the date of judgment in this case. Beneficiaries of deceased persons who were participants during this period are also included.

The complaint alleges that, as fiduciaries, the defendants have certain duties to the plan, including acting in the sole benefit of the participants, keeping costs low, and monitoring the investment options offered within the plan.

However, the complaint alleges that the defendants failed in these duties:

  • They “failed to fully disclose the expenses and risk of the Plan’s investment options…”
  • They “allowed unreasonable expenses to be charged to participants…”
  • They chose, maintained, “and/or otherwise ratified high-cost and poorly-performing investments” in the plan, even when more prudent alternatives were readily available.

The plan is a large one, with more than 26,000 participants and assets of around $1.66 billion. It is in the top 0.1% of defined contribution plans by size, the complaint says, and therefore has significant power to bargain for things like recordkeeping and administrative services.

Page 17 of the complaint shows a table comparing recordkeeping and administrative costs for this plan as compared to other plans of a similar size. This plan shows a per-participant fee of $48, while the others show per-participant fees of from $23 to $34.

The complaint alleges that the plan maintained a suite of target-date funds (TDFs, targeted to the participants’ expected retirement dates) which consisted of Fidelity Freedom Funds. These come in an Active (actively-managed) suite and an Index suite that simply tracks market indexes. The plan maintains the Active suite, but the complaint alleges that “any objective evaluation of the Active suite would have resulted in an examination of and the selection of a more consistent and better performing and more appropriate TDF…”

Even worse, the complaint alleges that the Active suite was the plan’s qualified default investment alternative, but charges that it is high-risk and therefore not suitable for participants.

Funds also charge investors annual fees. The complaint claims, “The fees charged by the Active suite are many multiples higher than the Index suite’s industry-leading low costs.” While the Index suite charged just 0.08%, the Active suite charged between 0.42% and 0.65%. These higher fees take money from the participants’ accounts and put it “straight into Fidelity’s pockets[.]” Charts in the complaint offer comparisons in this area as well.

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Yale-New Haven Hospital Annuity Plan Breach of Fiduciary Duty ERISA Complaint

January 21, 2022

The defendants in this case are the parties with responsibilities toward the Yale-New Haven Hospital and Tax Exempt Affiliates Tax Sheltered Annuity Plan—that is, Yale-New Haven Hospital, Inc., its Board of Directors, and the plan’s Investment Oversight Committee. The complaint alleges that these defendants breached their fiduciary duties to the retirement plan by permitting high costs, high fees, and poor investment choices, violating the Employee Retirement Income Security Act (ERISA).

Yale-New Haven Hospital Annuity Plan Breach of Fiduciary Duty ERISA Complaint

Case Event History

Yale-New Haven Hospital Annuity Plan Breach of Fiduciary Duty ERISA Complaint

January 21, 2022

The defendants in this case are the parties with responsibilities toward the Yale-New Haven Hospital and Tax Exempt Affiliates Tax Sheltered Annuity Plan—that is, Yale-New Haven Hospital, Inc., its Board of Directors, and the plan’s Investment Oversight Committee. The complaint alleges that these defendants breached their fiduciary duties to the retirement plan by permitting high costs, high fees, and poor investment choices, violating the Employee Retirement Income Security Act (ERISA).

Yale-New Haven Hospital Annuity Plan Breach of Fiduciary Duty ERISA Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plans