Transamerica Dismissed From the Singing River Health System DB Plan Saga
A federal judge said the special fiduciary appointed to oversee the plan has sole authority to file lawsuits on behalf of the plan.
Due to a technicality, claims against Transamerica Retirement Solutions regarding termination of the Singing River Health System (SRHS) Employees’ Retirement Plan and Trust have been dismissed.
Because of bad finances, the health system failed to make all but one of its contributions needed to maintain the “church” pension plan’s stability from 2009 to 2014. In December 2014, SRHS announced to participants that it was freezing the plan and would officially liquidate the plan “in the coming months.”
The plan was closed to new employees in 2011, and new employees are offered a defined contribution (DC) 403(b) plan. In 2014, SRHS offered defined benefit (DB) plan participants the option to receive a lump-sum payment equal to their total prior contributions, with interest calculated at the three-month treasury rate over the life of their contributions. They were also presented with the option of rolling their prior contributions into a new DB plan that would provide a defined benefit lower than the one in the old plan.
A Mississippi Chancery judge issued multiple restraining orders to prevent the health system from terminating its plan. Several lawsuits were filed against the health system and various parties to the plan and consolidated.
Separately, in litigation against KPMG and Transamerica Retirement Solutions, participants in the plan alleged that Transamerica, which was retained to provide investment management for the plan as well as investment advice to the plan trustees and plan members, knew or should have known that Singing River Health System had defaulted on its obligations to contribute to the plan and Transamerica owed a duty of disclosure as a plan fiduciary. It was alleged that Transamerica knowingly participated in and/or aided and abetted the former plan trustees’ breach of fiduciary duties. Plaintiffs also alleged that Transamerica made false representations to plan participants that the plan was adequately funded and that certain defined benefits were payable to each of them.
U.S. District Judge Louis Guirola Jr. of the U.S. District Court for the Southern District of Mississippi noted that the special fiduciary appointed to oversee the plan has sole authority to file lawsuits on behalf of the plan. He granted Transamerica’s motion to dismiss for lack of jurisdiction.