Another Lawsuit Questions Sponsor's Church Plan Status

April 16, 2013 ( – A former employee of Dignity Health, a California-based health care provider, has filed a complaint regarding its pension plans.

The lawsuit filed in the U.S. District Court for the Northern District of California challenges whether the pension plans in question are actually “church plans” and whether they should be exempt from federal regulations because of that status. The complaint states that Dignity Health, formerly Catholic Healthcare West, is “not a church or a convention or association of churches” nor does it meet any of the other criteria necessary to be considered a church plan sponsor under federal regulations. A similar suit was recently filed against Catholic Health East (see “Health Care Sponsor Challenged on Church Plan Status”).

The complaint says that in line with the Employee Retirement Income Security Act (ERISA), “Employees should not participate in a pension plan for many years only to lose their pension because their plan did not have the funds to meet its obligations,” and contends the plans are currently underfunded by $1.2 billion.

The lawsuit asks that the pension plans be brought into compliance with ERISA in several ways, including by revising plan documents to reflect that the plans are defined benefit plans and subject to the appropriate regulations; disclosing required information to participants and beneficiaries of the plans; reforming the vesting and accrual standards; and reforming the reporting and disclosure requirements (i.e., Form 5500, summary plan descriptions, etc.). The complaint also asks for Dignity Health to make whole any losses to participants; pay civil penalties to the plaintiff and other affected participants; and pay attorney fees and expenses to the plaintiff.

Dignity Health could not be reached for comment.

The complaint can be found here.