Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Oct. 24 — Washington-based Providence Health & Services will pay nearly $352 million to settle class action claims that it underfunded its pension plan by improperly treating it as a “church plan” exempt from federal funding requirements ( Griffith v. Providence Health & Servs. , W.D. Wash., No. 2:14-cv-01720-JCC, motion for preliminary settlement approval filed 10/20/16 ).
This agreement is the fifth—and by far the largest—settlement to come out of the recent litigation frenzy challenging the way religiously affiliated hospitals fund their pension plans. In May, Connecticut’s Saint Francis Hospital agreed to a $107 million settlement, and Trinity Health Corp. reached a $75 million deal with workers in August. Ascension Health settled similar claims for $8 million in 2015, and Alabama’s Baptist Health System Inc. reached an $11 million deal with its workers in August after making $89 million worth of voluntary pension contributions, according to court filings.
Over the past three years, the question of whether a large hospital can sponsor a pension plan exempt from the Employee Retirement Income Security Act has spawned three dozen proposed class actions and three appellate court rulings against the hospitals. The U.S. Supreme Court is expected to announce in the coming weeks whether it will wade into this ongoing controversy, in which plaintiffs claim that more than 250,000 hospital workers face a pension shortfall of nearly $4 billion.
According to Providence’s settlement papers, filed Oct. 20 in the U.S. District Court for the Western District of Washington, the hospital will contribute $350 million to its pension plan over a seven-year period. Providence also agreed to make cash payments of $500 to each of 3,802 former plan participants who allegedly would have received higher benefits had the health system adopted an ERISA-compliant vesting schedule.
The agreement, which still must be approved by a federal judge, requires Providence to continue making minimum plan contributions that aim to fully fund the plan by 2029. Providence is also barred from reducing participants’ accrued pension benefits in the event of a merger or termination, which is an ERISA-like protection described as “crucial” in the settlement papers.
The Providence workers are represented by Keller Rohrback and Cohen Milstein Sellers & Toll, which spearheaded this litigation effort by filing nine of the first 10 lawsuits against large hospitals in 2014. The settlement allows Keller and Cohen to seek attorneys’ fees and expenses of up to $6.5 million, which the settlement papers say will be issued separately and apart from the $352 million deal.
Proskauer Rose and Davis Wright Tremaine represent Providence.
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 motion for settlement approval is at http://www.bloomberglaw.com/public/document/Griffith_et_al_v_Providence_Health__Services_et_al_Docket_No_214c/3.
Copyright © 2016 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 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)