Hospital Reaches Settlement With Pension Plan Participants

The case is among a number filed that challenge the “church plan” status of a health care entity’s retirement plan.

By Rebecca Moore | October 11, 2017
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A federal judge has preliminarily approved a settlement agreement between participants of the St. Joseph’s Hospital and Medical Center pension plan and St. Joseph’s Hospital.

As with many similar complaints, the lawsuit challenges whether the plan was really a “church” plan and not subject to Employee Retirement Income Security Act (ERISA) funding rules.

In the order for preliminary approval, a judge for the U.S. District Court for the District of New Jersey certified a class, or plaintiffs. The settlement agreement says, “Nothing herein shall be construed as an agreement that the Plan is not properly treated as a Church Plan or that the Plan is subject to ERISA.” In spite of this, the terms of the agreement include many ERISA-like provisions.

Under the terms of the agreement, the defendants are obligated to contribute an aggregate amount of $42.5 million to the plan no later than 60 days after the agreement is executed or at any time prior. They may contribute that sum either directly to the plan or to an escrow account and then transfer these proceeds—including interest—to the plan 45 days after the agreement becomes final.

Additionally, at their discretion, the defendants may make further contributions to the plan at any time.

If, during the seven years after the agreement becomes final, the plan’s trust fund becomes insufficient to pay benefits as they are due, the defendants will need to shore up the trust fund so the benefits can be paid. In the event of a plan change such as a merger or consolidation during that time, participants and beneficiaries will be protected by entitlement to the same, or greater, accrued benefits under the terms of the plan as before. St. Joseph’s may amend or terminate its plan at any time, provided this will not result in the reduction of any participant’s accrued benefits as determined by the plan document.

Should the plan at some point be determined to fall under ERISA, it will then need to comply with the act’s applicable provisions.

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