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CommonSpirit Health Sued Over Retirement Plan’s Fidelity Funds

July 7, 2020, 4:51 PM

Catholic Health Initiatives and CommonSpirit Health are facing a proposed class action challenging a suite of target-date funds in the health system’s $3.2 billion retirement plan, according to a new lawsuit filed in the Eastern District of Kentucky.

The lawsuit by former Catholic Health employee Yosaun Smith centers on a suite of actively managed target date funds from Fidelity Management Trust Co., which isn’t named as a defendant. These funds, which Smith says serve as the plan’s default investment option, are more expensive and riskier than a similar suite of passively managed Fidelity funds, and they performed worse during the recent Covid-19 related market downturn, Smith alleged in a complaint docketed Monday.

Smith says the Fidelity Freedom funds in Catholic Health’s retirement plan were “dramatically more expensive” than a similar offering from Fidelity that uses a passive management strategy. The active funds also carried more risk and were “unsuitable for the average retirement investor,” Smith claims.

Smith’s suit is one of at least five proposed class actions filed in the past two weeks challenging an employer’s decision to offer the Fidelity Freedom funds in its retirement plan. The cases, which also target Quest Diagnostics Inc., Paychex Inc., Eversource Energy Service Co., and MedStar Health Inc., were filed by Shepherd, Finkelman, Miller & Shah LLP.

Employers have been hammered with lawsuits over their retirement plan fees, with more than three dozen cases filed in 2020 alone. Targeted employers include Costco Wholesale Corp., Estée Lauder Cos., and Trader Joe’s Co.

CommonSpirit Health was formed in 2019 through the merger of Catholic Health and California-based Dignity Health. It’s one of the largest not-for-profit health systems in the country.

Causes of Action: Breach of fiduciary duty and failure to monitor fiduciaries in violation of the Employee Retirement Income Security Act, or, alternatively, liability for knowing breach of trust.

Relief: Declaratory, injunctive, and equitable relief, damages, interest, attorneys’ fees, and costs.

Potential Class Size: Thousands of participants and beneficiaries in the Catholic Health 401(k) plan.

Response: CommonSpirit declined to comment on the allegations, citing a policy against discussing pending litigation.

Attorneys: Goldenberg Schneider LPA also represents the proposed class.

The case is Smith v. CommonSpirit Health, E.D. Ky., No. 2:20-cv-00095, complaint docketed 7/6/20.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editors responsible for this story: Rob Tricchinelli at; Carmen Castro-Pagan at