Hospital Pensions Hammered by 'Church Plan' Class Actions

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By Jacklyn Wille

May 13 —Hospital workers have filed 15 class actions in the past two months challenging multimillion-dollar funding shortfalls in their pension plans.

The lawsuits accuse religiously affiliated hospitals of improperly treating their pension plans as "church plans" exempt from the funding and disclosure requirements of the Employee Retirement Income Security Act. The average pension funding shortfall alleged by these workers is nearly $370 million per plan, with an average of 25,000 employees potentially affected in each instance.

The cases all ask the same question: Can a religiously affiliated hospital treat its pension plan as a “church plan” exempt from ERISA, or must the hospital comply with the statute's funding, vesting and disclosure requirements?

This litigation effort—which was spearheaded in 2013 by plaintiffs' firms Keller Rohrback LLP and Cohen Milstein Sellers & Toll PLLC—has hit nearly 20 health-care companies in total, spanning 18 different judicial districts. The workers have scored victories in the U.S. courts of appeals for the Third and Seventh Circuits, with future rulings expected from the Ninth and Tenth Circuits.

Recent court filings suggest that one of the targeted hospitals, Illinois-based Advocate Health Care Network, plans to take this fight to the U.S. Supreme Court.

Wave of Litigation

Since the Seventh Circuit determined that Advocate's pension plan wasn't an ERISA-exempt church plan in March, 15 church plan class actions have been filed against 10 different hospitals. The Cohen-Keller litigation team has filed six of the lawsuits, with two other law firms—Kessler Topaz Meltzer & Check LLP and Izard Nobel LLP, which frequently work together—responsible for the others.

The targeted hospitals are:

 

  • St. Elizabeth Medical Center of Edgewood, Ky. The Izard-Kessler litigation team sued St. Elizabeth in a Kentucky federal court, alleging a $204 million underfunding affecting as many as 7,600 employees.
  • Mercy Health (formerly Catholic Health Partners) of Cincinnati. Mercy Health has been sued in Ohio by both the Izard-Kessler team and the Cohen-Keller team. Both lawsuits allege a pension underfunding of about $210 million, with up to 32,000 employees affected.
  • SSM Health Care Corp. in St. Louis. SSM has been sued in both Missouri and Illinois federal court, with an alleged underfunding of more than $700 million and 31,000 employees affected. The Missouri lawsuit has since been voluntarily dismissed.
  • Bon Secours Health System of Marriottsville, Md. Both litigation teams have accused Bon Secours of a $390 million underfunding affecting 22,000 employees.
  • Wheaton Franciscan Services Inc. of Wheaton, Ill. Kessler Topaz sued Wheaton Franciscan in Illinois federal court, arguing that nearly 18,000 employees are affected by a pension underfunding of $137 million.
  • Franciscan Missionaries of Our Lady Health System of Baton Rouge, La. The Izard-Kessler team alleges $298 million underfunding affecting nearly 11,000 employees.
  • Franciscan Alliance Inc. of Mishawaka, Ind. Both litigation teams accuse the company of harming between 14,600 and 18,000 workers with a pension underfunding of $378 million.
  • OSF HealthCare System of Peoria, Ill. The Cohen-Keller team alleges a $380 million underfunding affecting 16,000 employees.
  • Iowa Health System,doing business as UnityPoint in West Des Moines, Iowa. The Izard-Kessler team accuses the company of a $97 million pension underfunding affecting more than 30,000 employees.
  • Mercy Health of Chesterfield, Mo. Mercy Health has been sued in Oklahoma and Missouri federal courts over an alleged pension underfunding of between $308 and $340 million, with 40,000 employees affected.

 

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com