The suit says about $584 million was invested in the challenged fund at the end of 2024.
SEATTLE — Five former Providence employees have filed a proposed class action in federal court in Seattle, alleging Providence mishandled two 401(k) plans by keeping an underperforming Invesco fund in the investment lineup for years.
The complaint, filed Friday, names Providence Health & Services, St. Joseph Health System, the Providence St. Joseph Health board and two committees that oversee the plans.
The lawsuit alleges breaches of fiduciary duty and other violations under the Employee Retirement Income Security Act, or ERISA.
The plaintiffs are all former Providence employees who say they invested in the challenged fund through the plans.
The suit says Providence’s decisions caused nearly $70 million in losses to the plans and their participants.
According to the complaint, the fund at the center of the case is the Invesco Diversified Dividend Fund R5.
Plaintiffs say Providence kept the fund in the plans beginning April 17, 2020, even though it had lagged peer benchmarks for years.
The suit also says the fund has been part of the plans since at least 2014.
The complaint says Providence’s two plans had about 146,825 participants and roughly $14 billion in assets in 2024.
As of Dec. 31, 2024, about $584 million, or about 4% of plan assets, was invested in the Invesco fund, according to the lawsuit.
Plaintiffs allege workers who wanted a U.S.-based large-value or dividend-paying option had no other choice in the plans besides the Invesco fund.
They say the fund trailed its benchmarks on a trailing three-year basis for nine straight years, on a trailing five-year basis for eight straight years and on a trailing 10-year basis for three straight years.
The lawsuit also says that if money invested in the Invesco fund since 2017 had instead been placed in comparable funds identified in the complaint, participants would have had about $166.94 million more by the start of 2026 on average.
The plaintiffs are asking the court to order defendants to restore losses to the plans, provide accountings, remove fiduciaries found to have breached their duties, bar future ERISA violations and reform the plans to include only prudent investments.
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