Aug. 2 — Trinity Health Corp. will pay $75 million to settle class action claims that it underfundedits pension plans by improperly treating them as “church plans” exempt from federallaw (Lann v. Trinity Health Corp., D. Md., No. 8:14-cv-02237-PJM, motion for preliminary settlement approval filed8/1/16).

The settlement requires Trinity Health to contribute $75 million among nine different pension planswithin the Trinity Health umbrella, including the plan for Catholic Health East, whichmerged with Trinity in 2014. While this settlement is less than the $107 million dealConnecticut-based St. Francis Hospital agreed to in May, it dwarfs the $8 million settlement reached by Ascension Health and its workers in a similar case last year

Significantly, Trinity also agreed to run the pension plans in compliance with certainfederal funding requirements and worker protection laws for the next 15 years.

Three Dozen Lawsuits

The settlement puts an end to two of the nearly three dozen class actions that havebeen filed against large hospitals over the past three years. In each lawsuit, thehospital is accused of mismanaging and underfunding its pension plan—often by hundredsof millions of dollars—by wrongfully claiming a religious exemption from the EmployeeRetirement Income Security Act.

While district judges have issued mixed rulings, the three federal appellate courtsto have considered these cases all ruled against the hospitals. The U.S. courts ofappeal for the Third, Seventh and Ninth circuits concluded that only a church—and not a hospital with a claimed religiousaffiliation—can establish an ERISA-exempt church plan.

Last month, both Advocate Health Care Network and Saint Peter’s Healthcare System asked the U.S. Supreme Court to wade into the dispute and allow them to run an ERISA-exemptchurch plan.

Settlement Terms

In addition to making three $25 million pension plan contributions, the settlement requires Trinity to pay 219 individual employees $550 each to compensate them forbenefits they allegedly lost by taking lump sum pension distributions in 2014.

In a similar vein, Trinity will distribute $1.3 million among the 7,371 former employeeswho allegedly forfeited certain benefits as a result of the pension plans’ vestingrequirements, which employees argued violated ERISA.

The settlement allows class counsel to seek up to $8 million in attorneys’ fees, expensesand incentive awards for certain plaintiffs.

The settlement papers were filed Aug. 1 in the U.S. District Court for the Districtof Maryland. According to the papers, the deal has the potential to benefit as manyas 116,000 individuals who work for Trinity-affiliated entities.

The settlement must receive approval from a federal judge before becoming final.

The employees are represented by Michelle C. Yau, Karen L. Handorf, Mary J. Bortschellerand R. Joseph Barton of Cohen Milstein Sellers & Toll PLLC, Washington, and Lynn L.Sarko, Havila Unrein, Matthew Gerend, Ron Kilgard and Laurie B. Ashton of Keller RohrbackLLP, Seattle and Phoenix.

The Trinity defendants are represented by Howard Shapiro, Robert W. Rachal, StaceyC.S. Cerrone and Connie N. Bertram of Proskauer Rose LLP, New Orleans and Washington,and Robert R. Niccolini of Ogletree Deakins Nash Smoak & Stewart PC, Washington.