On October 31, 2022, United States District Judge Mark Kearney of the Eastern District of Pennsylvania approved a $12.5 million settlement of class action claims alleging that Universal Health Services, Inc. (“Universal” or the “Company”) mismanaged its defined contribution retirement plan (the “Plan”). Plaintiffs, former Universal employees Mary Boley, Kandie Sutter, and Phyllis Johnson (collectively, “Plaintiffs”) specifically alleged that the Company mismanaged the Plan by incorporating excessive fees and risky, high-cost investment options.
Plaintiffs sued under the Employee Retirement Income Security Act of 1974 (“ERISA”), a regulatory labor law that establishes standards of prudence and loyalty for retirement and health plan administrators to protect enrolled individuals and their beneficiaries. Under ERISA, plan administrators, trustees, and investment committees named as fiduciaries and must act on behalf of plan beneficiaries. Entities subject to ERISA fiduciary responsibilities must act for the exclusive benefit of participants, choose prudent and diverse investment options to offer through a plan, and ensure that plan expenses are fair and reasonable.
Plaintiffs argued that Universal breached its fiduciary duties under ERISA by retaining high-cost and poor-performing investment options in the Plan instead of better-performing alternatives, failing to disclose the risks and expenses of those investment options, and allowing Plan participants to pay recordkeeping fees that were excessive of true administrative costs. Plaintiffs, represented by Miller Shah LLP, accordingly brought this class action lawsuit in June 2020 to recover losses incurred from Plan mismanagement and seek appropriate relief for all related classes.
Universal denied wrongdoing and partially moved to dismiss the action on October 9, 2020, arguing that Plaintiffs lacked standing for want of concrete injuries. On October 30, 2020, the Court denied the Company’s motion to dismiss and held that Plaintiffs have standing to bring each of their claims because Defendants’ challenged conduct applied uniformly to all funds offered to Plaintiffs and potential class members. In June 2022, the United States Court of Appeals for the Third Circuit upheld the District Court’s decision to certify a class of over 60,000 people (the “Settlement Class” or the “Class”).
Both parties worked diligently toward resolving the suit, participating in a full-day mediation session and weeks of subsequent negotiations. These efforts eventually culminated in a $12.5 million settlement. In granting preliminary approval, the Court described the settlement as “fair, reasonable, and adequate, and in the best interest of Plaintiffs and [the] putative Settlement Class.” The $12.5 million sum will go toward rectifying Plaintiffs’ alleged losses incurred from Plan mismanagement. A Final Approval hearing is scheduled for March 2023 to review the ultimate fairness of the settlement and the certification of the Class.
Class members can access case-related materials and file a claim at the following link: Universal Health Services Inc. 401k Settlement – Strategic Claims Services. The case caption for this matter is Boley et al. v. Universal Health Services Inc. et al., No. 2:20-cv-02644-MAK, filed in the Eastern District of Pennsylvania.
The legal team at Miller Shah LLP has significant experience representing ERISA matters. If you have any questions regarding this subject or this post, please contact Alec Berin (firstname.lastname@example.org) or Jonathan Dilger (email@example.com). The firm can also be reached toll-free at (866) 540-5505.
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