St. Francis Hospital and Medical Center has agreed to pay $107 million to settle a lawsuit alleging it underfunded its pension plan.
The July 2015 class-action suit alleged that St. Francis underfunded its pension plan by nearly $140 million, or approximately 34 percent, as of 2013. The Catholic health system has contended that its pension plan is a “church plan,” making it exempt from certain federal pension rules under the Employee Retirement Income Security Act, or ERISA.
Plaintiffs argued that the plan was not a church plan because it wasn’t established or maintained by a church. But St. Francis spokeswoman Fiona Phelan said Wednesday that the hospital continues to consider the plan a church plan.
She said St. Francis “remains committed to ensuring our retirees and their beneficiaries receive their benefits under all of our retirement plans.”
“We have complied with the law, and all applicable requirements related to our retirement plans,” Phelan said. “As intended, the plan has paid benefits in full to our retirees and will continue to do so into the future. The lawsuit was resolved by committing to fund the plan in a manner consistent with what Saint Francis has done in the past and intends to do in the future.”
The settlement includes a $17 million immediate payment, followed by annual contributions of $10 million over the next nine years, according to court documents.
The settlement was first reported by Bloomberg on Monday.
St. Francis was recently acquired by Michigan-based Trinity Health Corp., which operates Catholic hospitals around the country.
The settlement requires St. Francis to borrow from its new parent company if it’s unable to make the payments.
In written statements filed in court late last week, lead plaintiff Carol Kemp-Delisser of East Windsor called the settlement “an excellent result” that translates to approximately $60,000 per member of the proposed class of plan participants.
