Another church-affiliated hospital system is being sued by employees challenging its defined benefit plan’s exemption from federal pension law.
On Oct. 20, health-care workers at Daughters of Charity Health System in Los Altos Hills, Calif., filed a class-action lawsuit in U.S. District Court in San Francisco to have the pension fund covered by the Employee Retirement Income Security Act. The plaintiffs are claiming that the hospital system’s church plan exemption has allowed the pension fund to be underfunded by $229 million. The size of the pension fund could not be learned by press time.
The legal challenge was prompted by the hospital system’s announcement on Oct. 10 that it is being sold to Prime Healthcare Services of Ontario, Calif. In a statement announcing the sale, Daughters of Charity Health System said that “by making the purchase, Prime Healthcare is ensuring a continuity of care while preserving the pension plans of DCHS workers past and present.”
Officials with the Service Employees International Union-United Healthcare Workers West, which is backing the plaintiffs, want the company to commit to fully funding the pension plan.
SEIU-UHWW officials cite a July decision in a separate case by the same District Court that Dignity Health should not be able to keep its church plan exemption, which Judge Thelton Henderson said was based on “an erroneous IRS ruling (that) should not be permitted to trump a court’s interpretation of a statute.”
Calls to Daughters of Charity Health System were not returned.