Franciscan Missionaries of Our Lady Health System, Baton Rouge, La., has reached a settlement agreement in a participant class-action lawsuit challenging its status as a church plan exempt from ERISA and minimum funding requirements.
Court documents filed May 5 by the plaintiff attorneys state that the health system will contribute $125 million to three pension plans over the next five years, beginning with $35 million in each of the next three years, and then $10 million for two years. The pension plans are frozen, and the court will certify the class eligible for the terms of the agreement.
Franciscan also agreed to pay $450 each to more than 2,000 plan participants who took lump-sum buyouts in 2016, and to guarantee plan participants that their promised benefits will be paid for the next 15 years.
The lawsuit was filed April 21, 2016. While Franciscan's motions to dismiss the case were pending, “the parties recognized that it might be possible to resolve the case,” and mediation began, according to the proposed agreement, which said the settlement was reached “after nearly a year of litigation and several rounds of hard-fought negotiations.” The document said the settlement “is an excellent result for the class, especially considering the uncertainty in the law applicable to 'church plans' and the risks that lay ahead if this litigation continued.”
The Supreme Court heard oral arguments March 27 in a consolidated church-plan challenge brought by church-affiliated plan sponsors Dignity Health, Advocate Health Care and Saint Peter's Healthcare System, appealing lower court decisions that they are bound by federal pension law. A decision is expected by June.
