Providence Health & Services has agreed to pay nearly $352 million to settle a proposed class action accusing the nonprofit hospital chain of trying to avoid Employee Retirement Income Security Act (ERISA) requirements by claiming it fits under an exemption for churches. Two longtime nurses, Linda Griffith and Jeanette Wenzl, had sought to represent a class of more than 73,000 employees in their November 2014 complaint. They alleged that the company was violating their rights by failing to protect their retirement plan.
The Washington-based hospital will pay $50 million a year for the employees’ benefit plan until it has paid $350 million, according to the terms of the proposed settlement filed by the nurses leading the suit. The remaining $1.9 million will be paid to nonvested former plan participants.
The nurses’ claims mirror those of other hospital chain workers who have fought all the way to the Supreme Court to sort out the issue of whether hospitals that claim a religious affiliation can extend that to relief from following ERISA’s requirements for retirement plans.
There are several other cases addressing the issue that the high court may take. One of the cases, Dignity Health, sought review from the high court of a similar decision in the Ninth Circuit. In that case, filed by employees, it was contended that skirting the rules has shorted their pension plan by $1.2 billion. Dignity won a stay of the lower court’s order while it pursued its Supreme Court appeal. The company claimed it would suffer irreparable harm if it had to convert its plan to fit ERISA rules before the high court has a chance to weigh in. There are two other cases, Advocate Healthcare Network in Illinois and Saint Peter’s Healthcare System in New Jersey, where the companies are requesting review of appellate decisions cutting them out of the exemption.
In those suits, the Seventh and Third circuits concluded the hospitals’ retirements plans aren’t excluded from ERISA as “church plans.” But the hospitals argued in filings with the Supreme Court that the appellate court rulings run contrary to “longstanding positions held by the IRS, the U.S. Department of Labor and the Pension Benefit Guaranty Corp.” that the organizations do not have to comply with ERISA provisions, including fiduciary obligations and minimum-funding rules.
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