Final approval of a class-action settlement with Dignity Health over its church plan status has been delayed by U.S. District Judge Jon S. Tigar in San Francisco while the plaintiffs clear up some "deficiencies" related to attorney's fees and payments to subclasses of former employees.
Mr. Tigar ordered the plaintiffs Monday to address those issues by Nov. 25, but granted plaintiffs' request to seal some documents.
The proposed class settlement calls for San Francisco-based Dignity Health to contribute $50 million in 2020 and $50 million in 2021. It also requires mandatory funding contributions to the plan for five years and payment of $1.49 million to a related group of vested participants, according to an earlier settlement notice. That notice also stated that Dignity Health has made previous voluntary contributions to the plan, including $271 million in fiscal 2018.
In the preliminary settlement, both parties agree to not challenge whether the Dignity Health plan is a church plan or one covered by ERISA. Dignity Health also agreed to not enter into any merger arrangement that reduces benefits and that benefits would be fully vested in the event of a plan termination.
Actuarial estimates provided by Dignity Health project required contributions of $162 million in 2021, $170 million in 2022, $178 million in 2023 and $187 million in 2024, according to the court filing.
The complaint in Rollins et al. vs. Dignity Health et al. was first filed in April 2013 by plaintiffs seeking more than $2 billion in missed pension contributions and other damages. Among other claims, the lawsuit challenged the interpretations made by the IRS and the Department of Labor that allowed the hospitals in the Dignity Health network, which have varying degrees of church associations, to be exempt from the Employee Retirement Income Security Act.
In December 2013, the U.S. District Court had ruled that Dignity Health did not qualify for a church plan exemption from ERISA because only a church can sponsor and maintain a church plan. That decision was affirmed in July 2016 by the 9th U.S. Circuit of Appeals in San Francisco. Dignity Health then asked the U.S. Supreme Court to review the appellate decision, and the case was consolidated with two similar church plan challenges against Advocate Health Care Network and St. Peter's Healthcare System.
The Supreme Court ruled in June 2017 that pension plans did not have to be established by a church to be exempt from ERISA, as long as they are controlled by or associated with one. Plaintiffs then filed the amended class-action complaint in November 2017.