A federal judge has approved a $60 million settlement between SSM Health Care Corp., and a group of workers who accused the St. Louis-based health care system of overstating its link to the Catholic Church in order to be exempt from Employee Retirement Income Security Act (ERISA) rules as a so-called “church plan.”
In its complaint, the workers accused SSM Health of violating numerous provisions of ERISA, including underfunding the SSM Health Plans “while erroneously claiming that the plans are exempt from ERISA’s protections because they are ‘Church Plans.’”
According to the plaintiffs, citing SSM Health’s most recent financial statements, the company’s plans are currently underfunded by at least $700 million combined.
The plaintiffs argued that SSM Health “plainly is not a church,” and that its health plans were not established by a church or a convention or association of churches.
“SSM Health may claim that it is permitted to establish its own Church Plans under ERISA, even though it is not a church, because it is an organization ‘controlled by’ or ‘associated with’ a church, within the meaning of ERISA,” said the workers in their complaint. “Even if ERISA permitted such nonchurch entities to establish Church Plans, which it does not, SSM Health is not controlled by a church.”
They also said that SSM Health “is not associated with a church within the meaning of ERISA because it does not, as ERISA requires, ‘share common religious bonds and convictions’ with a church.”
According to the terms of the settlement, SSM will contribute a minimum of $15 million per year to the health plans during the calendar years of 2019, 2020, 2021, and 2022, for a total of $60 million. It also has to pay $115 to each worker who received their retirement savings in a lump-sum distribution. However, the total settlement payment could be reduced to $50 million if the company pays that amount before Dec. 31, 2020.
SSM is also required to allocate the contributions among the plans to attempt to have them funded equally on a percentage basis, and to fund the plan with the lowest funding percentage first. Any amount paid in excess of $15 million during the calendar years of 2019, 2020, and 2021 may be used to reduce subsequent contributions.
Under the settlement, SSM Health does not admit any liability, and it continues to assert that each of its health plans has been, and continues to be properly administered as a church plan, as defined by the Internal Revenue Code, and ERISA.