Providence Health & Services, Renton, Wash., will contribute $350 million to its pension plan to settle a class-action lawsuit challenging its church-plan status.
The settlement agreement, filed Oct. 20 in U.S. District Court in Seattle and awaiting court approval, calls for to contribute $50 million early in 2017 and then annual payments of $50 million for six additional years. After that, Providence will make annual contributions based on actuarial recommendations that would fully fund the plan by the end of 2029, but the agreement “shall not be interpreted to require full funding by then,” according to the settlement, which said the payments will continue “as long as the plan has not been terminated.” Providence also agreed to pay any vested benefits if the pension fund assets are insufficient.
Providence will also pay up to $1.9 million to 3,802 non-vested former employees, at $500 per person, and up to $6.5 million for plaintiffs' attorney fees.
Plan participants will receive benefit statements and the plan will file annual reports with information dictated by ERISA, under the agreement.
The settlement includes no admission of liability. “Providence reached a settlement as a good financial steward. Providence has always made substantial contributions to the core plan and is committing to do the same,” spokeswoman Adrienne Webb said in an e-mailed statement. The plan “is well funded, properly administered and has been paying accrued benefits to eligible caregivers for decades. We maintain that the core plan is properly designated a church plan,” Ms. Webb said. Providence is a not-for-profit Catholic health-care system operating in five western states.
The class action was filed in November 2014. Providence filed a motion to dismiss, but the parties agreed to stay the case pending the outcome of a similar case on appeal to the 9th U.S. Circuit Court of Appeals, after a San Francisco District Court ruled for the plaintiffs in Rollins vs. Dignity Health, finding that the plan was covered by ERISA.
On July 26, the appeals court agreed, but its mandate was temporarily stayed by the U.S. Supreme Court on Sept. 21, until the Supreme Court rules on a pending petition by Dignity to hear its appeal.
In May, Saint Francis Hospital and Medical Center, Hartford, Conn., agreed to settle a church-plan class-action lawsuit and contribute $107 million to its pension plan.
In August, Trinity Health Corp. agreed to contribute $75 million to nine different pension funds as part of a settlement agreement in two similar class-action lawsuits.