Plan participants challenging the church plan status of Franciscan Alliance Inc.'s pension plan dropped their lawsuit, according to an order filed Oct. 16 in U.S. District Court in South Bend, Ind.
The lawsuit, Cappello vs. Franciscan Alliance Inc., filed in 2016 questioned the hospital network's connection with the Catholic Church as a basis for the church plan exemption that excused it from funding and disclosure requirements under ERISA. The plaintiffs argued that the pension plan does not qualify for the church plan exemption because it was not established or maintained by a church.
The proposed class action, which survived an initial motion to dismiss, alleged that the Franciscan Alliance Pension Security Plan was underfunded by $320 million, and that between 2013 and the end of 2014, the underfunding tripled, from $116 million to $378 million, according to the health-care network's consolidated financial statements.
An attorney for the plaintiffs declined to comment, and a call to attorneys for the defense was not returned.