Judge Tosses Church Plan Lawsuit Against Adventist Health System

Basically, the plaintiff never alleged an injury from the DB plan operating as exempt from ERISA requirements.

Adventist Health System Sunbelt Healthcare Corporation has been relieved of a lawsuit challenging its defined benefit (DB) plan administration as a church plan exempt from provisions of the Employee Retirement Income Security Act (ERISA).

The lawsuit, amended three times, accused fiduciaries of the DB plan of failing to fund the plan and provide reporting per ERISA rules. As with the dismissal of previous iterations of the complaint, U.S. District Judge Gregory A. Presnell of the U.S. District Court for the Middle District of Florida found that in many counts, the plaintiff did not sufficiently allege an injury or did not specify which defendant to which the count applied.

For example, Count I seeks declaratory relief that the plan is subject to ERISA and an order directing the defendants to bring the hospital plan into compliance with ERISA. But, Presnell noted that the plaintiff does not allege any concrete or particularized injury to the plan or herself from the plan not being subject to ERISA. He also found that no injury was alleged in other counts against the defendants for failing to file annual reports, failing to provide participants with ERISA notices, and failing to provide annual funding notices. “Plaintiff contends that the deprivation of ERISA safeguards itself constitutes an injury-in-fact. Perhaps so under certain circumstances, but the Court will not presume that any time there is a procedural violation of ERISA, there is a corresponding concrete injury,” Presnell wrote in his order.

In Count V, the plaintiff alleges that the health system, the retirement board, and the administrative committee failed to provide minimum funding in violation of ERISA. Presnell found the plaintiff has not adequately pleaded that the plan was underfunded for purposes of ERISA requirements. She conceded that a plan is considered “at risk” if the funded status is below 80%, and the health system’s DB plan is 81% funded.

The plaintiff alleged that the church plan exemption from ERISA as applied to the defendants violated the Establishment Clause of the U.S. Constitution. Presnell said the plaintiff does not allege any concrete or particularized injury to the plan or herself, so, as with other counts, he dismissed this one for lack of standing.

Given it was her third try at making the lawsuit stick, Presnell decided “the time has come to dismiss this suit with prejudice.”