A Pennsylvania federal district court judge granted in part and denied in part a motion to dismiss a proposed class action alleging Penn State Health mismanaged its defined-contribution retirement plans. The judge also ordered discovery into claims that the poorly performing investment options breached fiduciary duties under the Employee Retirement Income Security Act (ERISA). The case is Muldoon v. Penn State Health et al., Case Number 1:25-cv-01181, U.S. District Court for the Middle District of Pennsylvania.
Former employee James Muldoon sued Penn State Health in June 2025, claiming losses to his 401(k) plan due to excessive recordkeeping and administrative fees, as well as underperforming investment options. He made the same claims on behalf of all participants in Penn State Health’s 403(b) plan, which operates as a retirement plan for nonprofits.
The judge dismissed Muldoon’s individual claims, citing a severance agreement he signed in 2024 that released all claims when he left his employment. However, the judge refused to dismiss Muldoon’s derivative claims on behalf of participants in the two Penn State Health retirement plans. Furthermore, the judge largely denied Penn State Health’s motion to dismiss for failure to state a claim on Muldoon’s allegations of excessive fees and underperforming investments, finding the allegations sufficient to state a claim.
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