Allina Health System Hit with ERISA Suit in Connection to Retirement Plans

In August 2017, Allina Health System faced a proposed class action in Minnesota federal court filed by former employees alleging that Allina Health flouted ERISA (the Employee Retirement Income Security Act). The employees allege that Allina failed to make sure that the options available were not detrimental to retirement plan participants.

Judy Larson, Janelle Mausolf, and Karen Reese are all ex-employees of Allina Health System. All named Allina Health System (provider of medical care in Minnesota and Wisconsin), the Allina board of directors, the company’s chief administrative officer, chief human resources officer, and entire retirement committee as defendants in the suit. Within the extensive complaint (91 pages in full), the plaintiffs stated that the two defined contribution retirement plans they have an issue with, have more than $1 billion in combined assets, making them jumbo plans. In fact, this makes them amongst some of the largest plans in the entire nation. The sheer size of the plans means Allina has significant buying power regarding expenses and fees that are charged against their participants’ investments.

In spite of this and the opportunity it created to potentially reduce the plans’ costs and otherwise manage the offered investment options in the most prudent fashion, Allina abdicated its fiduciary oversight to Fidelity, the plans’ trustee.

Under Fidelity’s oversight, the plans saw high-cost, non-Fidelity mutual funds through which Fidelity themselves received millions in revenue sharing. The situation also enabled Fidelity to add any Fidelity mutual fund that was available no matter if the funds duplicated other options or not, had higher than norm costs, had low performance, or were otherwise not beneficial to plan participants.

In the end, the plan participants ended up paying fees that were much higher than those from comparable retirement plans with similar asset amounts. The plaintiffs allege the Allina breached its duties of loyalty and prudence through a systematic failure to monitor performance and costs for the retirement plans’ investment options and by including high-cost options that were not only not beneficial, but actually detrimental to participants. The company’s failure to negotiate lower fees and expenses associated with the plans and failing to swap out high-cost/low performance options for better performing, more fiduciary prudent options was also noted in the plaintiffs’ allegations.

The plaintiffs in the case seek class action status that would include tens of thousands of people.

If you have similar allegations or need to ask questions about employment law violations in the workplace, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

Pilot Claims Aetna is in Violation of ERISA

Bryan C. Trujillo, a commercial aircraft pilot, filed suit against Aetna (U.S. District Court for the Northern District of California case number 3:17-cv-04017-JSC). Trujillo alleges that Aetna is in breach of contract and that they violated the Employee Retirement Income Security Act (ERISA). The original complaint was filed on July 17th in U.S. District court for the Northern District of California.

Definitions to Know:

ERISA: ERISA refers to the Employment Retirement Income Security Act of 1974. Shortened to ERISA, the Act is a federal law that sets the minimum standards for voluntarily established pension and health plans in private industries. It is designed to provide protection for individuals in the voluntary pension and health plans from unfair or unethical behaviors that could be detrimental to plan members.

Allegation: In the legal world, an allegation is a formal claim against another individual, group or institution.

Trujillo, Plaintiff, listed Aetna Life Insurance Company as the Defendant in the case. Allegations against the Defendant included wrongfully denying a claim for disability benefits submitted by Trujillo. Trujillo described the events in the original complaint, stating that he worked as a commercial aircraft pilot for Federal Express. While working for the major shipping conglomerate, Trujillo became disabled. Trujillo was suffering from severe obstructive sleep apnea and a sleep-wake schedule disorder. When the issues arose, Trujillo applied for benefits expecting to be able to resolve the issue, but he was denied.

Trujillo alleges that Aetna Life wrongfully refused his claims – refusing to provide the needed ongoing disability benefits despite the fact that Trujillo provided the required proof of his disability to the company.

Trujillo hopes to obtain the needed benefits plus interest, statutory penalties, legal fees and any other relief that the court deems appropriate.

If you have questions or concerns regarding ERISA, how it applies to you or what protections it offers you in connection to our voluntary pension or health plan, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.