Second Case Against Cerner Dismissed Then Reopened

A federal judge dismissed a second excessive fee fiduciary breach lawsuit filed against Cerner Corporation, but that order has been vacated.

According to the court docket for the case, U.S. District Judge Eric F. Melgren of the U.S. District Court for the District of Kansas granted Cerner’s motion to dismiss, noting that the case has substantially similar parties and issues as the first case filed against the company. He said nothing warranted “disregarding the first-to-file rule.”

Details of Melgren’s memorandum and order published on December 2 are not available. A docket entry on that same date says the parties in the case are scheduled to confer on December 8, “to discuss the status of the potential settlement of the case.”

Both cases allege that the defendants breached their Employee Retirement Income Security Act (ERISA) fiduciary duties by failing to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

In the second case, the plaintiffs say the defendants continuously designated Cerner stock (i.e., an undiversified investment) as the default investment option for the employer portion of contributions instead of well-diversified options, “even though Cerner’s stock performed poorly in comparison to its benchmark, thereby imposing more risk and risk-concentration on participants—something that was in Cerner’s interests but not in the interest of the participants.”