Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
June 7 — Chicago's Holy Cross Hospital is the latest health-care company to be accused of underfunding its pension plan by improperly treating it as a “church plan” exempt from federal law ( Butler v. Holy Cross Hospital , N.D. Ill., No. 1:16-cv-05907, complaint filed 6/6/16 ).
Thirty similar lawsuits have been filed against religiously affiliated health-care companies over the past three years, but this case differs by targeting a terminated pension plan that allegedly cut workers' benefits by more than half. In particular, the lawsuit—filed June 6 in Illinois federal court—accuses Holy Cross of illegally dumping its pension obligations on an order of Chicago nuns in the course of the hospital's 2013 merger with Sinai Health System.
These lawsuits all ask the same question: Can a religiously affiliated hospital treat its pension plan as a “church plan” exempt from the Employee Retirement Income Security Act, or must the hospital comply with statutorily required worker protections, such as funding requirements and federal insurance coverage?
District courts initially issued mixed rulings in these cases, but the workers were victorious in the twocases that reached the appellate court level. Two hospitals have agreed to public settlements in these cases: Ascension Health for $8 million in 2015 and Connecticut-based St. Francis Hospital for $107 million in May ( 100 PBD, 5/24/16 ). In two other lawsuits, workers recently dropped their claims against UnityPoint Health and SSM Health Care Corp.
According to the complaint against Holy Cross, the hospital operated its pension plan in accordance with ERISA until 1993, when it retroactively claimed church plan status and obtained a reimbursement of the premiums it paid for federal pension protection insurance.
When Holy Cross merged with Sinai Health System in 2013, the hospital attempted to transfer liability for the pension plan to an order of nuns called the Sisters of Saint Casimir of Chicago, the complaint argues. At this time, the plan was allegedly underfunded by $31 million.
Two years after the allegedly illegal transfer, the Sisters of Saint Casimir announced that the plan would be terminated and benefits paid out in lump sums, the complaint contends. These lump sums were calculated using discount rates that resulted in drastically lower payment amounts than what would be available under ERISA, according to the complaint.
The workers argue that this attempted transfer violated ERISA's prohibition on activities that evade or avoid plan liability within five years of a plan's termination.
In their 12-count complaint, the workers are seeking class treatment for about 2,000 participants in the pension plan. They also seek a declaration that the plan is governed by ERISA, along with relief for the allegedly improper plan termination and benefit reductions.
A spokeswoman for Sinai Health System declined to comment on the lawsuit.
Cohen Milstein Sellers & Toll PLLC, Keller Rohrback LLP and DeBofsky & Associates PC represent the workers. Cohen Milstein and Keller Rohrback also represent workers in 17 other similar lawsuits against health-care companies.
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of the complaint is at http://www.bloomberglaw.com/public/document/Butler_et_al_v_Holy_Cross_Hospital_HCH_et_al_Docket_No_116cv05907.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)