A Pennsylvania law firm has filed a class-action lawsuit claiming Portland’s Legacy Health mismanaged its retirement plan, while seeking unspecified “millions of dollars” in damages.
The suit, filed in federal court in Portland, says Legacy and its retirement committee breached their fiduciary responsibility to wisely manage employees’ retirement plans, including offering “imprudent” investment choices and forcing participants to pay higher-than-necessary fees while enriching the plans’ administrators. It also blames Legacy for “underperformance” of certain retirement investments.
The lawsuit seeks class-action status. It asks the court to require Legacy to pay into the plan its losses from its “imprudent” investments, and to disgorge profits it earned through administrating the plan.
Asked about the allegations raised in the lawsuit, a Legacy Health spokesperson said it does not comment on pending litigation.
The lawsuit represents a national trend of law firms suing employers over shortcomings in their retirement plans, depriving employees of profits they otherwise would have earned. In 2024, lawyers filed 136 lawsuits alleging violations of the Employee Retirement Income Security Act (ERISA), according to the Polsinelli law firm, which predicts an uptick in 2025.
The Oregon lawsuit adds to the challenges being navigated by Legacy Health, which operates six hospitals, more than 70 clinics and employs approximately 14,000 people.
Like health care systems around the country, Legacy is fighting industry and political headwinds that hospital executives say are eroding their ability to operate profitably. It sought for more than a year to be absorbed into Portland’s Oregon Health & Science University, but both systems abandoned the effort in May, citing an “evolving operating environment.” Over the past 18 months, Legacy has seen its employees organize, its president retire, and its financial losses continue, though a bond rating agency said in April its prospects have improved.
Suit cites ‘imprudent’ retirement plan choices
The retirement plan lawsuit says the plans’ managers failed to “adequately review the Plans’ investment portfolio with due care to ensure that each was prudent, in terms of cost and performance.” It said, for example, that the overseers should have removed the underperforming T. Rowe Price Growth stock fund, one of an extensive menu of stock funds offered in the plans. That fund’s underperformance, the suit alleges, cost plan participants “millions of dollars” in losses.
The suit focuses on a pair of Legacy retirement plans with combined total assets of $2.4 billion at the end of 2023. Together, the plans had more than 33,000 participants, both employees and former employees. Both plans gained in assets in 2023, the most recent year for which results are publicly available.
The retirement plans are held in trust, and are not mingled with health system finances.
The Pennsylvania firm, Capozzi Adler P.C., joined with Dallas, Ore.,-based Jarvis Bridge Halttunen & Weyer to file the suit June 17. Partner Neil Halttunen referred questions to Capozzi Adler. Capozzi Adler didn’t respond to a query from The Lund Report, but its website touts its fiduciary practice group and its skein of lawsuits against retirement plans around the country.
For example, one of the stories linked to on the website describes how Capozzi Adler’s clients struck a $2 million settlement deal with Massachusetts-based Southcoast Hospitals Group, which it accused of offering “overly expensive” investment options and charging “excessive” fees. Retirement plan settlements typically are paid for by the employer and/or its insurer.