The complaints in Owens v. St. Anthony Medical Center and Lann v. Trinity Health both draw similar arguments to other so-called “church plan” challenges moving through the federal courts (see “Church Plan Lawsuits Could Reverse 30 Years of Precedent”).
In the Owens v. St. Anthony case, the concern from plaintiffs is that St. Anthony Medical Center Inc. (SAMC), a subsidiary of co-defendant Franciscan Sisters of Chicago Service Corporation (FSCSC), inappropriately claimed reporting and funding exemptions under the Employee Retirement Income Security Act (ERISA), based on its contested affiliation with a church group.
Case documents show FSCSC and SAMC are accused of underfunding their retirement plan by over $32 million. In short, the plaintiffs argue that the retirement plan never met the definition of a church plan under ERISA due to the fact that neither SAMC nor FSCSC is classified as a church or an association of churches. The potential class action seeks remedies for some 1,900 plan participants who, according to the compliant, suffered cutbacks of up to 40% of their pension benefits when defendants purportedly terminated the retirement plan in April 2012. Had the plan been ruled by ERISA, such cutbacks would not have been permitted, the participants claim.
In the case of Lann v. Trinity Health, Trinity Health is described by the plaintiffs as an organization responsible for operating a “hospital conglomerate,” not a church or association of churches, leading to similar argumentation. Plaintiffs say the Trinity Heath organization has failed to appropriately maintain its pension plan under ERISA for its 56,000 workers. Similar to the dilemma that SAMC finds itself in, Trinity is accused of attempting to use the protections afforded to church plans to its benefit.
Case documents show participants feel Trinity is “violating numerous provisions of ERISA—including underfunding the Trinity Plans by over $600 million—while erroneously claiming that the plans are exempt from ERISA’s protections because they are ‘church plans.’” The participants claim none of the Trinity plans meet the definition of a church plan because “Trinity plainly is not a church or a convention or association of churches and because none of the Trinity plans were established by a church or convention or association of churches.”
— John Manganaro and Matthew Miselis