A lawsuit accusing the wrongful designation of Wheaton Franciscan Services Inc.’s pension plan as a “church plan” exempt from federal law will end with Ascension Health guaranteeing $29.5 million in benefit payments, according to court papers filed September 1.
The arrangement will see Ascension, which acquired Wheaton’s healthcare operations in 2016, guarantee payment of the first $29.5 million paid under the Wheaton pension plan if it can’t cover the payments itself. In addition, Ascension will also provide plan participants with annual notices informing them of the plan’s funding levels.
Last July, a pair of former employees brought the federal class-action lawsuit against Wheaton and Ascension hospitals, accusing them of dodging federal pension safeguards and mishandling the pension plan by claiming an improper religious exemption.
In June, the US Supreme Court held that the Employee Retirement Income Security Act (ERISA) allows hospitals with religious affiliations to run their pensions as church plans exempt from the edict’s funding, disclosure, and vesting requirements. Prior to the ruling, religiously affiliated hospitals were regularly sued over their church plan pensions, leading to multimillion-dollar settlements among various hospitals such as Washington-based Providence Health & Services’ $352 million settlement in 2016.
Before it’s finalized, the Wheaton settlement must be approved by the court.