Trinity Health Corp. will contribute $75 million to nine different pension funds as part of a settlement agreement in two class-action lawsuits challenging its church-plan status. The agreement also calls for Trinity to administer the plans under ERISA guidelines for the next 15 years.
The settlement papers were filed Aug. 1 in U.S. District Court in Beltsville, Md., and Judge Peter Messitte scheduled preliminary approval for Aug.17, according to court documents.
The settlement consolidates two class-action lawsuits, Lann et al. vs. Trinity Health Corp. et al., filed in Maryland in July 2014, and Chavies et al. vs. Catholic Health East et al., filed in Pennsylvania in March 2013. Catholic Health East merged into Trinity Health Corp. in July 2014.
The Catholic Health East lawsuit claimed that the pension plans were underfunded by $439 million; the Trinity lawsuit alleged underfunding of more than $600 million.
In the settlement, the defendants deny all allegations of wrongdoing and maintain their argument that Trinity qualifies for the church-plan exemption. Trinity has contributed an average of $175 million or more to the pension plans in recent years, and “the plans have been well funded historically,” according to the settlement.
Trinity Health said in an e-mailed statement: "In order to avoid the expense of long-term litigation and keep our focus on our mission of caring for our patients and communities, Trinity Health has agreed to terms under which pending lawsuits against Catholic Health East and Trinity Health are being settled ... We remain fully committed to ensuring our colleagues receive the retirement benefits they have earned. The settlements are subject to court approval."
Trinity will contribute $25 million to the plans annually for three years, and make $550 lump-sum payments to 219 employees for alleged losses related to lump-sum distributions.
Another 7,371 former plan participants will share a $1.3 million payment to settle allegations of ERISA violations over vesting requirements, with any unused balances going back to the pension plans.
For the next 15 years, Trinity will guarantee sufficient funds to pay accrued benefits without any decreases, including in the event of a merger. Trinity reserved the right to terminate and/or annuitize some or all of the benefits, as long as there are sufficient funds.
In a memorandum, the plaintiffs' lawyers with law firms Cohen Milstein Sellers & Toll and Keller Rohrback said the settlement “will enhance the retirement security of the members of the settlement class — in essence mimicking some of ERISA's key provisions for the next 15 years.”
Cohen Milstein is investigating several other health-care facilities for possible church-plan violations, including Adventist Health System, Bon Secours, Mercy Health, Baptist Memorial Health Care and Christus Health, according to the law firm's website.
