$1.9 billion lawsuit alleges that Dartmouth Health system mismanaged employee retirement funds
31,256 employees joined the plaintiffs in the lawsuit filed in March.
Last month, a class-action lawsuit was filed against Dartmouth Health, at the time known as Dartmouth-Hitchcock Health, alleging they mismanaged up to $1.9 billion in employees’ funds for retirement.
The lawsuit was brought to the Federal District Court of New Hampshire on March 18 by Pennsylvania-based firm Capozzi Adler, P.C. It includes four plaintiffs and 31,256 other members of the class-action suit. It alleges that the Dartmouth Hitchcock Clinic, its Board of Trustees and the investment Oversight Committee failed to properly manage the 401(a) and 403(b) retirement plans of employees.
The lawsuit says that Dartmouth Health mismanaged the plans by failing to objectively review the plans’ investment portfolios and failing to control their record-keeping and administration costs.
According to the lawsuit, the law governing these retirement plans’ states that Dartmouth Health, as a trustee of the retirement plans, is obligated to minimize costs when devising and implementing strategies for the investment and management of assets.
“Plaintiffs allege that… defendants, as ‘fiduciaires’ of the Plan, as that is defined under [the Employee Retirement Income Security Act,] breached the duties they owed to the Plans, to Plaintiffs, and to the other participants of the Plans,” the lawsuit states.
Specifically, the lawsuit alleges that the plans’ investment management fees for members have been unreasonable. The suit states that the two retirement plans had at least $1.2 billion combined in assets under management at all times, having over $1.9 billion at the end of fiscal year 2020, but had higher fees than other plans of a similar size.
In an emailed statement, senior manager of media relations Audra Burns said that Dartmouth Health was aware of the lawsuit and that they have managed the plans in accordance with their duties.
“Dartmouth-Hitchcock does not comment on the specifics of any pending litigation, however we can state that we deny the allegations and we will vigorously defend this lawsuit,” she wrote. “We understand employees may be concerned by this news, but Dartmouth-Hitchcock has managed the Plans in accordance with its fiduciary duties and we remain committed to continuing to serve the Plans for the benefit of all participants and plan beneficiaries.”
The plaintiffs are seeking an order compelling the defendants to “make good” on the financial losses incurred due to their alleged breach of their fiduciary duties.
“To restore to the plans all profits the defendants made through use of the plans’ assets, and to restore the plans all profits which the participants would have made if the defendants had fulfilled their fiduciary obligations,” the lawsuit states.
The firm representing the plaintiffs, Capozzi Adler, P.C., is based in Harrisburg, Pa. The named plaintiffs represented by the firm are Debra Adams, of Canaan; Danillie Mars, of Claremont; Michelle Miller, of Buskirk, N.Y. and Anita Dame, of Manchester.
The 31,256 other members of this class-action suit represent current and former employees that were beneficiaries or participants of these plans since March 18, 2016.
Discovery for this case will begin next, in which both parties will have the ability to gather evidence before trial.
Donald Reavey, a lawyer at Capozzi Adler, declined to comment on anything past what was contained in the pleadings.
Mars declined The Dartmouth’s requests for comment. Adams did not respond to requests for comment by time of publication.