Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Louisiana hospital system Franciscan Missionaries of Our Lady Health will pay more than $125 million to settle a proposed class action challenging its reliance on a religious exemption from federal pension law ( Nicholson v. Franciscan Missionaries of Our Lady Health Sys. , M.D. La., No. 3:16-cv-00258-SDD-EWD, motion for settlement approval filed 5/5/17 ).
The deal, announced in federal court papers filed May 5, requires the hospital system to contribute $125 million to three of its pension plans over a five-year period. It will also make $450 payments to each of 2,087 pension plan participants who took a lump-sum buyout in 2016.
The lawsuit accused Franciscan Missionaries of wrongly treating its pension plans as church plans exempt from the funding requirements of the Employee Retirement Income Security Act, which caused the plans to be underfunded by nearly $300 million. More than three dozen similar class actions have been filed over the past four years. Several hospitals have agreed to multimillion-dollar settlements, including Washington-based Providence Health & Services ($352M), Connecticut-based Saint Francis Hospital ($107M), Trinity Health Corp. ($75M), Ascension Health ($8M) and Alabama-based Baptist Health System Inc. ($11M).
The U.S. Supreme Court heard arguments on the scope of ERISA’s church plan exemption in March and is expected to rule on that issue before the end of its current term in late June. The federal district courts have been mixed on this question, but three federal appellate courts—the U.S. Courts of Appeals for the Third, Seventh and Ninth circuits—have ruled against the hospitals and found that ERISA-exempt church plans must be established by churches, not hospitals.
The Franciscan Missionaries settlement requires the hospital to guarantee that pension plan participants will receive their promised benefits for the next 15 years. The deal must receive approval from the U.S. District Court for the Middle District of Louisiana before becoming final.
Kessler Topaz Meltzer & Check LLP and Izard Nobel LLP represent the plan participants. The deal allows these firms to seek attorneys’ fees of up to $1 million, which is less than 1 percent of the total settlement.
Proskauer Rose LLP and Holifield Janich Rachal & Associates PLLC represent Franciscan Missionaries.
To contact the reporter on this story: Jacklyn Wille in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Text of the motion for settlement approval is at http://www.bloomberglaw.com/public/document/Nicholson_v_Franciscan_Missionaries_of_Our_Lady_Health_Systems_et/1.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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 email@example.com.
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 firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)