Boston Children's Hospital has reached a settlement in a high-stakes lawsuit accusing the institution of mismanaging its $1.1 billion retirement plan. The agreement, struck during a Feb. 11 mediation, comes after plan participants alleged the hospital allowed excessive fees and underperforming investments, violating its fiduciary duty.

In a joint filing submitted Friday, both parties informed a Massachusetts federal court that they had reached a settlement in principle. While the exact terms remain under wraps, the parties plan to either seek preliminary approval or provide an update to the court by April 18.

Retirement Plan Participants Alleged Costly Mismanagement

The lawsuit, filed in 2022, alleged that Boston Children's Hospital allowed its retirement plan to be overcharged for recordkeeping and administrative services, significantly exceeding industry standards.

According to the complaint, plan participants paid an average of $73 per year over the last five years—nearly double the rates of comparable plans, which ranged between $23 and $42. Additionally, the plaintiffs argued that the hospital offered underperforming investment options, further harming participants' retirement savings.

Court Rejected Hospital’s Attempt to Dismiss Case

Boston Children's Hospital fought to have the case dismissed, asserting that fiduciaries are not obligated to select the lowest-cost retirement plans. The hospital also claimed that many plaintiffs had not actually invested in the funds under scrutiny.

However, U.S. District Judge Angel Kelley rejected that argument in March 2023, ruling that the participants had plausibly alleged a fiduciary breach. With that decision, the case moved forward, intensifying pressure on the hospital to resolve the claims.

Legal Teams and Case Background

The retirement plan participants are represented by attorneys from Miller Shah LLP, Bailey & Glasser LLP, and Capozzi Adler PC, while Boston Children's Hospital has enlisted Morgan Lewis & Bockius LLP for its defense.

The case, Monteiro et al. v. The Children's Hospital Corp. et al., is being heard in the U.S. District Court for the District of Massachusetts under case number 1:22-cv-10069.

With the settlement now in motion, all eyes will be on the court's next move as Boston Children's Hospital seeks to put this costly legal battle behind it.