Judge rules in favor of Catholic health system in ERISA case
The Employee Retirement Income Security Act exempts pension plans that are “established and maintained for its employees by a church or by a convention or association of churches” if they have tax-exempt status. Now a federal judge in Colorado has dismissed a case against Denver-based Catholic Health Initiatives. This is a non-profit group of hospitals in 17 states.
The case began in 2013 when participants in CHI’s defined benefit retirement plans filed a lawsuit alleging that the pensions of some 78,000 employees were underfunded by nearly $900 million. The attorneys for the plaintiffs claimed that CHI did not have the right to church-plan exemptions under ERISA because it “plainly is not a church or a convention or association of churches.”
In his summary judgment, the judge stated that the plaintiffs’ definition of “church” was too narrow. He ruled that CHI was operating under the Catholic Church’s authority. He stated that “CHI is a church plan, and thus exempt from the requirements of ERISA.” He also noted that the group that oversees the pension plan is instructed to “share common religious bonds with the Roman Catholic Church and the Sponsoring Congregation of Catholic Health Initiatives.”
This spring, plaintiffs in a suit that alleged that another Catholic hospital network, Ascension Health, settled their suit. They had alleged that Ascension Health underfunded its pension plans by some $440 million.
However, this so-called “church plan” decision involving CHI may set a precedent for other class-action lawsuits across the U.S. in which plaintiffs claim that church-affiliated healthcare systems are underfunding their pension plans.
Most people who participate in employer-sponsored pension plans are not familiar enough with the ins and outs of the decisions made regarding their plans. However, if you learn of a class-action suit against your company’s plan, it’s essential to learn more about the issue and talk with those who are involved in the legal action.
Source: BenefitsPro, “Church plan claim against Catholic Health Initiatives dismissed,” Nick Thornton, Dec. 31, 2015