A settlement has been reached in a class action lawsuit alleging Providence Health & Services violated the Employee Retirement Income Security Act (ERISA) by misapplying an exemption meant for churches.
Providence Health & Services agreed to pay $352 million to settle the ERISA lawsuit. According to the lead plaintiffs in the class action, 73,000 employee retirement plans were at risk because Providence Health & Services claimed it was exempt from ERISA requirements and failed to properly protect their retirement plans.
The Providence Health & Services ERISA lawsuit was filed in November of 2014. The lead plaintiffs in the lawsuit included two nurses who argued the Washington-based healthcare provider was jeopardizing their and other employees’ retirement plans and violating their rights. In their motion for settlement, the plaintiffs asserted that “Class counsel believed that the settlement will provide a substantial benefit to the settlement class and that, when that benefit is weighed against the attendant risks of continuing the prosecution of the action, the settlement represents a reasonable, fair and adequate resolution of the claims of the settlement class.”
According to the ERISA lawsuit, Providence Health & Services tried to extend the and ERISA exemption for churches by claiming that its hospital and medical services were an extension of its religious affiliation. A spokesperson for Providence Health & Services stated, “The core plan is well¬funded, properly administered and has been paying accrued benefits to eligible caregivers for decades. We maintain that the core plan is properly designated a church plan, and Providence reached a settlement as a good financial steward.”
Under the Providence Health & Services ERISA lawsuit settlement, Providence Health & Services will pay $50 million into employee retirement plan funds until it has paid a total of $350 million. Non-vested former plan participants will receive $1.9 million.
Several other major health organizations have come under fire in different ERISA lawsuits for making claims like the Providence Health and Services Case. These ERISA lawsuits are currently working their way through the court system. While the Providence Health & Services ERISA lawsuit will not likely provide a final determination on whether religiously affiliated organizations are exempt from retirement protections, legal experts believe that the Supreme Court will hand down a ruling using one of the many pending ERISA lawsuits.
Employees in one lawsuit claim that the medical organizations claiming they were exempt from ERISA protections because of their religious affiliation were shorting retirement plans by $1.2 billion.
In similar ERISA lawsuits, the Seventh and Third Circuit Court of Appeals refused to extend the ERISA exemption for churches to affiliated medical centers and hospitals. These hospitals are now taking their case to the Supreme Court arguing that the Internal Revenue Service, U.S. Department of Labor, and Pensions Benefit Guaranty Corp. all agree that they are not subject to ERISA regulations regarding minimum-funding and fiduciary obligations.
If you are concerned that your pension plan failed to follow ERISA’s requirements, contact Bradley/Grombacher today for a free and confidential review of your claims. Fill out the form on this page now for a FREE case evaluation.