Ex-Molina Workers Advance Challenge to Flexpath Funds in 401(k)

Former Molina Healthcare Inc. employees advanced portions of their federal lawsuit claiming the California health-care company and its hired advisers swapped well-performing Vanguard funds for novel and untested funds in their $740 million retirement plan.

The workers have viable claims for fiduciary breach and prohibited transactions against Molina and investment manager Flexpath Strategies LLC based on the Flexpath funds added to their plan, Judge Stanley Blumenfeld Jr. said. The former employees can also press claims that Molina failed to properly monitor plan fiduciaries in violation of the Employee Retirement Income Security Act, he said.

Other allegations in the workers’ five-count ...