Ramos v. Banner Health
| Citation | 461 F.Supp.3d 1067 |
| Decision Date | 20 May 2020 |
| Docket Number | Civil Action No. 15-cv-2556-WJM-NRN |
| Parties | Lorraine M. RAMOS, et al., Plaintiffs, v. BANNER HEALTH, et al., Defendants. |
| Court | U.S. District Court — District of Colorado |
Heather Lea, Kurt Charles Struckhoff, Michael Armin Wolff, Patrick Richard Kutz, Sean Matthew Milford, Troy Andrew Doles, Jerome Joseph Schlichter, Schlichter Bogard & Denton LLP, Saint Louis, MO, for Plaintiffs.
Jennifer B. Routh, Margaret H. Warner, McDermott Will & Emery LLP, Washington, DC, Linda L. Siderius, Meghan Elizabeth Pound, Caplan & Earnest, LLC, Boulder, CO, Richard Jason Pearl, Theodore M. Becker, McDermott Will & Emery LLP, Chicago, IL, for Defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW ENTERED UPON TRIAL ON THE MERITS TO THE COURT
Plaintiffs Lorraine M. Ramos and others ("Plaintiffs") bring this class action against Banner Health ("Banner"), as well as current and former employees of Banner Health (together, "Banner Defendants"), alleging that Banner Defendants breached their fiduciary duties related to the Banner Health Employees 401(k) Plan ("Plan") under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. Plaintiffs allege that Banner Defendants, fiduciaries of the Plan, violated various provisions of ERISA by failing to prudently monitor certain Plan offerings, retaining certain investment options for too long, using a revenue sharing model to pay for recordkeeping services which resulted in the paying of excessive recordkeeping fees and allegedly improper payments, and impermissibly using Plan assets to pay certain Banner expenses.
Plaintiffs sought and obtained class certification with respect to their claims against Banner Defendants. ECF No. 296. The Court certified the following class: "All participants and beneficiaries of the Banner Health Employees 401(k) Plan from November 20, 2009 through the date of judgment, excluding the Defendants." Id. at 25–26, 31. The class period runs from the date this action was filed, November 20, 2009, through the date of judgment ("Class Period").
On January 6, 2020, the case proceeded to an eight-day bench trial before the undersigned on the following claims:
As relief, Plaintiffs seek approximately $85 million in Plan losses and appropriate injunctive relief. Ex. 458 at 127, 179–81.
Post-trial, the parties submitted final proposed findings of fact and conclusions of law. ECF Nos. 458 & 459.2
For the reasons discussed below, the Court orders that, after the supplemental briefing discussed below in Part IV is completed and the Court so orders, the Clerk shall enter judgment on certain Counts in favor of Plaintiffs, and on certain Counts in favor of Banner Defendants.
1. Defendant Banner is a large non-profit healthcare system, with primary markets in Arizona and Colorado. Trial Transcript ("Tr.") 666:15–667:1 (Test. of Dennis Dahlen).3
2. Banner sponsors and administers the Plan. Ex. 689 at 42. The Plan is an individual account, defined contribution plan. Ex. 689 at 6. The purpose of the Plan is to "provide a method of long-term savings and a means of providing retirement benefits for Eligible Employees." Ex. 689 at 6.
3. Banner employees who elect to participate in the Plan ("Plan Participants" or "Participants") may contribute a portion of their employment compensation to their own retirement account in the Plan. Ex. 689 at 16.
4. During the Class Period, Banner matched each eligible employee's contributions up to 4% of the Participant's salary. Ex. 689 at 19; Tr. 1255:2–16 (Test. of Margaret DeHaan). In 2017, Banner reported over $71 million in matching employer contributions. Ex. 689 at 19; Tr. 1527:25–1528:11 (Test. of Thomas Kmak); Ex. 1114 at 199.
5. From 2009 to 2016, Banner grew substantially in terms of the number of constituent units or facilities, merging with and acquiring other healthcare entities. Tr. 667:19–668:16 (Dahlen).
6. During that same period, the Plan experienced a large growth in the number of Participants and value of assets. Compare Ex. 1106 at 2, 45 with Ex. 1113 at 2, 208. As of December 31, 2009, the Plan had 23,166 Participants and approximately $1.18 billion in assets. Ex. 1106 at 2, 45. As of December 31, 2016, the Plan had 41,416 Participants and approximately $2.25 billion in assets. Ex. 1113 at 2, 208. Below is a chart, a demonstrative exhibit referenced at trial, showing the number of participants in the Plan and amount of Plan assets as of December 31 of each year included in the chart. The Court has verified the underlying data, finds that the chart accurately represents the information therein, and reproduces the chart for ease of reference. The Court has, however, removed the chart's title given to it by Plaintiffs.
Date Participants Assets
12/31/2009 23,166 $1,182,545,765
12/31/2010 29,788 $1,389,586,854
12/31/2011 30,327 $1,410,659,567
12/31/2012 30,618 $1,604,374,153
12/31/2013 31,444 $1,914,416,078
12/31/2014 33,026 $2,010,841,424
12/31/2015 38,690 $2,047,562,407
12/31/2016 41,416 $2,252,261,043
Stipulation Between Parties, 5500 Assets and Participant Counts
Ex. 1750 (demonstrative); Ex. 1106 at 2, 208, Ex. 1107 at 2, 46; Ex. 1108 at 3, 50; Ex. 1109 at 3, 47; Ex. 1110 at 3, 47; Ex. 1111 at 5, 40; Ex. 1112 at 2, 37; Ex. 1113 at 2, 208.
7. The Plan is governed by a written Plan document (the "Plan Document"). See generally Ex. 689.
8. Banner is responsible for determining "the class or classes of investments that will be made available as investment option under this Plan" and "may in its sole discretion add additional options or delete existing options at any time." Ex. 689 at 23.
9. Plan Participants may invest the funds in their individual accounts in the various investment options selected for the Plan by Banner. Ex. 689 at 23–24.
10. During the Class Period, the Plan included three tiers of investment options, ranging from "set-it-and-forget-it" target date funds to a wide range of mutual funds for active investors. Ex. 1140 at 9–24. Information about these tiers, and investment options within each tier, was communicated to Plan Participants in various written materials. See generally Ex. 905; Ex. 1140. The range of investment options allowed Plan Participants "to create a diversified portfolio to help [Participants] meet [their] individual needs" based on "goals, time horizon and risk tolerance." Ex. 905 at 3; Ex. 1140 at 5. Participants were informed that the "336 investment options available through the Plan include conservative, moderately conservative and aggressive funds." Ex. 1140 at 5.
11. The...
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