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OSF Healthcare church-plan challenge dismissed

Updated with correction

A participants' lawsuit challenging the church-plan status of OSF Healthcare System, Peoria, Ill., was dismissed Friday.

U.S. District Court Judge Staci Yandle in Benton, Ill., granted the non-profit corporation's motion for summary judgment claiming its two defined benefit plans properly qualify for the church-plan exemption and are not subject to the Employee Retirement Income Security Act of 1974.

Summary judgment was appropriate because "there is no genuine dispute as to any material fact," Ms. Yandle said in the order. She also dismissed the argument that such an exemption was unconstitutional.

OSF Healthcare System was founded by The Sisters of the Third Order of St. Francis. It operates 11 acute care hospitals, home health-care services and other health-care facilities in Illinois and Michigan.

It administers two defined benefits plans for its employees, including ones of the recently acquired St. Anthony's Health Center. The plans are Sisters of the Third Order of St. Francis Employees Pension Plan, with 17,946 participants, and the Retirement Plan for Employees of Saint Anthony's Health Center, with 1,339 participants, according to court documents. The asset sizes of the plans could not be learned.

A class of plan participants challenged its church-plan status, but Ms. Yandle said in the order that "the undisputed facts demonstrate that OSF shares common religious bonds and convictions" with the Roman Catholic Church.

"In addition to numerous references to Catholicism throughout its statements of values, OSF has incorporated Roman Catholic doctrine into its basic structure," Ms. Yandle said, noting also that OSF is listed in the Official Catholic Directory, which "courts view ... as a public declaration by the Roman Catholic Church that an organization is associated with the church."

The plaintiffs allege that OSF Healthcare violated ERISA on several points, including failing to furnish plan participants with summary plan descriptions, annual reports, notifications of failure to meet minimum funding, or funding notices.

The OSF plans were only 50% funded, and "there exists a substantial risk that the OSF plans will be unable to pay the accrued pension benefits to which plaintiffs and the other class members are entitled," according to the plaintiff's amended complaint filed in October 2017.

Calls to OSF Healthcare and attorneys for both parties were not returned at press time.