A U.S. District Court magistrate judge in Cincinnati approved a settlement in the class-action lawsuit challenging the church plan status of Mercy Health's defined benefit plans.
The case stems from consolidated class actions filed in March 2016 that were stayed in January 2018 while the parties worked on a settlement. The settlement, approved Wednesday, received preliminary approval in August.
The plaintiffs, participants in five defined benefit plans that include more than two dozen smaller plans from health-care firms absorbed by Mercy Health, challenged the plans' exemption from the Employee Retirement Income Security Act based on its affiliation with the Roman Catholic Church. That exemption, the plaintiffs alleged, violated ERISA rules on reporting and disclosure, minimum funding and fiduciary duties.
Cincinnati-based Mercy Health denied the exemption was incorrectly used, arguing it is part of the Roman Catholic Church, the court documents said.
Mercy Health spokeswoman Maureen Richmond said in an emailed statement: "While the law is on our side and our plans are well-funded, we are pleased to have agreed to a settlement to end litigation that would result in expenses for our ministry. This settlement ends the 'church plan' litigation and maintains the legal status of our pension plans as church plans."
The settlement calls for Mercy Health to guarantee for nine years accrued benefits for plan participants. If there is a merger during that nine years, plan participants will be entitled to the same or greater benefits under the settlement.
Mercy Health also will pay $625,000, or $450 each, to some class members who took voluntary lump-sum distributions from several of the plans from January 2011 through February 2018.
The terms of the settlement agreement are subject to change if the Internal Revenue Service or a court determines that the plans do not qualify for the church plan exemption, if the Roman Catholic Church disassociates itself from the plan sponsors, or if Mercy Health elects ERISA coverage for the plans, the settlement agreement said.
