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Mercy Health’s $3.9 Million Retirement Plan Deal Denied Approval

Nov. 26, 2021, 3:25 PM

A $3.9 million class settlement over Mercy Health Corp.'s retirement plan brokerage fees hit a stumbling block when an Illinois federal judge declined to sign off on the deal because of its inclusion of a preliminary injunction.

The settlement asks the court to enter a preliminary injunction barring class members and their agents from asserting any claims related to the settlement agreement against the defendants in any other litigation, Judge Iain D. Johnston of the U.S. District Court for the Northern District of Illinois said. But the parties don’t identify any binding legal authority that would allow such an injunction, nor do they identify facts that would support one, Johnston said in a Nov. 24 order.

“The Court has a fiduciary duty to the class members,” Johnston said. “The Court is not going to enjoin class members from filing other litigation that may upset this settlement simply to help ensure that this case is removed from its docket.”

The proposed settlement, which was slated to benefit about 21,700 people, would resolve a year-old lawsuit claiming the “exorbitant” sales commissions associated with three Mercy Health plans were the highest recorded in a group of 650 similarly sized retirement plans, with no clear benefit to the plans’ participants in exchange for these high fees. The deal would require Mercy Health to retain an independent consultant to review the plans’ investment lineup and the fees associated with those investment options and any related brokerage services, according to the parties’ settlement papers.

The parties reached an agreement while Mercy’s motion to dismiss was pending.

The Mercy Health plan participants are represented by Nichols Kaster PLLP, Prinz Law Firm PC, and Walcheske & Luzi LLC, which would receive about $1.3 million in fees if the deal is ultimately approved.

Morgan, Lewis & Bockius LLP represents Mercy.

The case is Hill v. Mercy Health Sys. Corp., N.D. Ill., No. 3:20-cv-50286, 11/24/21.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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