Five former Providence employees say their retirement savings took a major blow, and they are taking their employer to court over it. In a proposed class action filed in federal court in Seattle, the ex-staffers claim Providence’s 401(k) plans lost nearly $70 million because the plans stuck with a single underperforming Invesco fund instead of moving workers’ money to stronger options.
The complaint targets Providence Health & Services, St. Joseph Health System, the Providence St. Joseph Health board, and the committees that oversee the retirement plans. The plaintiffs want a judge to restore the alleged losses and order reforms to the plans. They argue the fund remained in the plan lineup despite years of weak relative performance, which they say drained participants of critical retirement returns. The case joins a growing wave of lawsuits over how big employers choose and monitor investments in staff retirement accounts.
Lawsuit details
The suit was filed by five former Providence employees who invested through the system’s two retirement plans. It alleges roughly $70 million in losses to the plans and their participants and says the plans held about $14 billion in assets with roughly 146,825 participants in 2024. The plaintiffs are asking the court to order the defendants to restore the alleged losses, provide accountings of plan decisions, remove any fiduciaries found to have breached their duties, and reshape the plan menus so they include only what the plaintiffs call prudent investment options. Those allegations and financial figures were detailed by KING 5.
Fund background
At the center of the complaint is the Invesco Diversified Dividend Fund’s R5 share class, a dividend-focused equity product. Its prospectus and shareholder reports describe a range of share classes and expense information. Class R5 is commonly used by institutional retirement plans and is disclosed in Invesco’s public filings with the Securities and Exchange Commission.
According to Invesco’s prospectus and reports, the fund seeks long-term growth of capital and current income. Those documents spell out the fund’s objective, its share-class structure, and its fees, and they are publicly available from the company and from the SEC.
Providence’s recent ERISA history
This is not Providence’s first legal fight over retirement-plan management. Earlier this year, the health system reached a proposed settlement of roughly between $42 million and $43 million in a separate lawsuit that alleged misuse of forfeited plan assets. That prior settlement, reported by outlets including FierceHealthcare, underscores how costly retirement-plan disputes have been for the nonprofit.
Providence operates more than 50 hospitals and employs roughly 120,000 people, a footprint that could magnify the impact of any court findings about how its retirement plans are managed.
How plaintiffs quantify damages
The complaint states that about $584 million of plan assets were invested in the challenged Invesco fund as of Dec. 31, 2024. It alleges the fund lagged its benchmarks over trailing three-, five- and 10-year periods for multiple consecutive years.
According to the plaintiffs, if the money placed in the Invesco fund since 2017 had instead been invested in comparable funds, participants would have had roughly $166.94 million more by the start of 2026. That gap underpins the nearly $70 million loss figure cited in the lawsuit. Those calculations and the timing of when the fund was added to the plan menu were described in reporting on the complaint by KING 5.
What comes next
The case is in the early pleadings stage. If the court allows the proposed class claims to move forward, the parties will head into discovery, where plan records and communications with vendors are likely to be closely examined.
Under the Employee Retirement Income Security Act, plan participants can sue to recover losses caused by fiduciary breaches. The U.S. Department of Labor enforces fiduciary duties that require plan decision-makers to act “solely in the interest” of participants, and the plaintiffs say their case rests on that statutory framework.
We will be watching for new court filings and any response from Providence or plan fiduciaries as the litigation unfolds, particularly because the outcome could influence how large employers select and monitor investment options in their workers’ retirement accounts.
