In early September 2017, Ascension Health agreed to a $29.5 million dollar settlement deal to settle claims in putative class lawsuits based on allegations that the faith-based health care company denied ERISA (Employee Retirement Income Security Act) protections to plan participants and beneficiaries.
The judge granted preliminary approval of the proposed class action settlement in consolidated putative class action suits when participants and beneficiaries of the Wheaton Franciscan Retirement Plan requested it in September. Ascension Health, a Missouri based organization, acquired the Wheaton Franciscan Services’ health care subsidiaries in the southeastern region of the Wisconsin state in spring of 2016.
According to plaintiff statements in court documents, the company guaranteed $29.5 million payment of benefits to members of the proposed settlement class in the event that trust assets attributable to the plan were insufficient to cover benefits.
In the original approval bid, plaintiffs made it clear that the obligation held by Ascension Health under the plan benefit guarantee would continue so long as the plan was sponsored by any of the releases. It was further noted that if plan assets and liabilities covering the settlement class members was transferred to a successor due to any type of corporate transaction, Ascension Health should ensure the successor honored the commitment/guarantee.
Plaintiffs filed suit initially in April 2016. This was followed by another putative class complaint in June 2016. The two cases were consolidated in January 2017. Allegations stated that Wheaton and Ascension denied ERISA protections to plan participants while claiming that the plan qualified as an ERISA-exempt “church plan.”
Plaintiffs alleged that the Defendants underfunded the plan by over $134.5 million. Allegations also stated that plan participants were improperly required to finish 5 years of service prior to becoming fully vested in their accrued benefits. In addition, plaintiffs state that the organization violated ERISA when they decreased accrued benefits by adding several amendments and filing to provide class members with required reports and/or statements.
The consolidated action was stayed by the court, pending the outcome of Advocate Health Care Network v. Stapleton in the U.S. Supreme Court. In June 2017, the opinion was issued stating that pension plans do not have to be established by churches in order to qualify as ERISA-exempt church plans.
Once this opinion was issued, the parties reached an agreement to settle the case.
If you have questions about ERISA or your rights in regards to the retirement plans provided by your employer, please get in touch with one of the experienced employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.