A U.S. District Court Judge in Dallas has dismissed for a second time a lawsuit by former employees of United Surgical Partners International Inc. who alleged ERISA violations by plan executives in a now-terminated 401(k) plan.
The plaintiffs argued that certain investments in the plan were more expensive and/or worse-performing than identical investments available in the marketplace, according to Perkins et al. vs. United Surgical Partners International Inc. at al.
"Pleadings that demonstrate plans being identical in every single way except price provide some context for the court to see the plausibility of imprudence claims," wrote U.S. District Court Judge Brantley Starr on March 10. "However, the plaintiffs did not plead this when the court gave them the opportunity."
The plaintiffs sued in April 2021. The judge dismissed the original lawsuit in March 2022 but said the plaintiffs could amend their complaint.
The judge wrote that the amended complaint was a "re-hash" of the original allegation about some identical, lower-cost investment options being available.
"The mere existence of lower-cost alternatives does not necessarily bring about a plausible claim; rather, the court's inquiry is context-specific," the judge wrote. "And here, the plaintiffs failed to provide the necessary context by which the court can infer imprudence. "
The judge also chided the plaintiffs for failing to address the defects in their original complaint about allegedly high costs. The amended complaint didn't show "why those costs were excessive in the light of the services that the plan offered," he wrote. "Plaintiffs did not make the necessary amendments to correct the issues the court identified."
The complaint covers the period from April 15, 2015, to Dec. 31, 2018, after which the plan was merged into a Tenet Healthcare 401(k) plan. United Surgical, Addison, Texas, is a subsidiary of Tenet Healthcare, Dallas. Neither Tenet nor its retirement plan is a defendant. The United Surgical Partners International Inc. 401(k) Plan had $456 million in assets as of Dec. 31, 2018.
