AHA yesterday joined the U.S. Chamber of Commerce and the Association of American Medical Colleges in a friend-of-the-court brief asking the U.S. District Court for the District of Connecticut to dismiss a lawsuit alleging that Yale New Haven Hospital violated its fiduciary duties by selecting a retirement plan with excessive fees or poorly performing investments. This is one of over 100 similar suits since 2019. In recent months, such suits have been filed against several hospitals and health systems, including Boston Children’s Hospital, Mass General Brigham, Rush University Medical Center, Beth Israel Deaconess Medical Center, Dartmouth-Hitchcock Medical Center, Munson Healthcare, and Henry Ford Health System.
“Using the benefit of hindsight, these cookie-cutter lawsuits challenge the decisions that retirement plan fiduciaries made about the investment options available to plan participants or the arrangements the fiduciaries negotiated with the plan’s service provider,” the brief states. “The complaints typically point to alternative investment or service options (among tens of thousands of investment options offered in the investment marketplace and the dozens of service providers with a wide variety of service offerings and price points) and allege that plan fiduciaries must have had a flawed decisionmaking process, and therefore violated ERISA’s fiduciary duties, because they did not choose one of those alternatives.”
The amicus brief argues that these arguments fail to appreciate that hospitals and health systems have “broad employee populations that encompass varying income levels and degrees of financial flexibility.” It adds, “If these types of conclusory and speculative complaints are sustained, hospital employees will be the ones who suffer.…[T]hese suits exert pressure on hospital fiduciaries and plan sponsors to limit investments to a narrow range of options at the expense of providing a diversity of choices with a range of fees, fee structures, risk levels, and potential performance upsides, as ERISA expressly encourages, and as is particularly important for employers with a diverse employee population.”