Cerner agreed to pay $4.05 million to settle a class-action lawsuit filed by a group of former employees who alleged the Kansas City, Mo.-based EHR company mismanaged its retirement plan, according to court documents filed Feb. 18.
The settlement, which requires approval from a federal judge, would resolve two lawsuits filed last year that were later combined. The suits claimed that Cerner since January 2014 has failed to investigate cheaper investment options for its $2 billion 401(k) plan and offered overly expensive mutual funds.
A Cerner spokesperson declined Becker's comment request, citing the company's policy against commenting on pending litigation.
In the lawsuit, the plaintiffs alleged Cerner breached its responsibilities to the defined contribution retirement plan and its participants by its failure to adequately review the investment portfolio. The plan allots for both Cerner and its employees to contribute and invest in funds over time while future benefits are determined by how well the plan's investments perform.
The settlement is expected to benefit 26,000 people covered by Cerner's retirement plan by giving them between 27 percent and 40.5 percent of their estimated damages, according to the settlement papers.
The settlement also includes Cerner's agreement to change the way it administers the retirement plan.