Welcome to the Hodges v. Bon Secours Health System, et al., Settlement website. This website is intended to keep Class members informed regarding the Class Action Settlement. While the District Court has approved the Notice of Proposed Settlement (the “Class Notice”) and ordered that certain documents filed with the Court be posted on this website, the content of this website is the responsibility of Plaintiffs’ Counsel and has not been approved by the Court.
The case involves seven defined benefit pension plans maintained by Bon Secours Health System, Inc. (“Bon Secours”). The seven pension plans—collectively referred to here as the “Plans”—are:
- Bon Secours Health System, Inc. Frozen Pension Plan
- Bon Secours Kentucky Health System, Inc. Pension Plan
- Bon Secours New York Health System Pension Plan
- Employees’ Retirement Plan of Bon Secours Baltimore Health Corporation
- Employees’ Retirement Plan of Bon Secours-St. Mary’s Hospital
- Memorial Regional Medical Center Pension Plan
- Retirement Plan of Bon Secours-Hampton Roads.
The lawsuit alleges that Bon Secours denied the Plans’ participants and beneficiaries the protections of the Employee Retirement Income Security Act (“ERISA”) by claiming that these defined benefit pension plans are “Church Plans” that are exempt from ERISA. The lawsuits further allege that the Bon Secours Plans violated ERISA in a variety of ways, and, alternatively, that application of the Church Plan exemption to the Bon Secours Plans violates the Establishment Clause of the Constitution.
The Bon Secours case was filed in federal district court in Maryland on April 11, 2016 against Bon Secours Health System, Inc., the Benefit Plan Administrative Committee, the individual members of that committee, and any additional individuals who would be discovered to have fiduciary responsibilities with respect to the Bon Secours Plans, as stated in the Complaint (“Bon Secours Defendants”). One week later, a plaintiff represented by another law firm, Plaintiff Carolyn Miller, filed a similar case against Bon Secours, also alleging that Bon Secours was improperly operating seven defined benefit plans as Church Plans in violation of ERISA (Miller v. Bon Secours Health System, Inc., 1:16-cv-1150 (D. Md.)). On August 24, 2016, after reviewing motions filed by both plaintiffs, the Court consolidated the two cases, appointed Cohen Milstein as Interim Lead Counsel and appointed both Plaintiffs as Interim Lead Plaintiffs. Hodges, Electronic Court Filing (“ECF”) 57; Miller, ECF 49.
Plaintiffs filed a Consolidated Amended Complaint on October 6, 2016. ECF 66. The Bon Secours Defendants filed a Motion to Dismiss the Consolidated Amended Complaint on December 5, 2016, arguing that Plaintiffs lacked standing under Article III of the United States Constitution because they had not suffered an injury-in-fact, that Plaintiffs failed to state a claim that the Bon Secours Plans were not proper Church Plans, and that ERISA’s Church Plan exemption did not violate the Establishment Clause. ECF 70.
On January 13, 2017, Plaintiffs Hodges and Miller, joined by another named plaintiff (Gary Brown), filed a Second Consolidated Amended Complaint (ECF 77), which, by the Court’s Order on January 17, 2017, rendered Defendants’ Motion to Dismiss moot. ECF 81. Upon filing the Second Amended Complaint, Plaintiffs also filed a Consent Motion to Request to Stay the case pending the Supreme Court’s ruling on three other, consolidated Church Plan cases (ECF 78), which the Court granted. ECF 81.
While the case was stayed, Plaintiffs and Defendants entered into settlement negotiations. Upon reaching an agreement, Plaintiffs filed a Joint Notice of Settlement on April 12, 2016 (ECF 85). Plaintiffs filed a Motion for Preliminary Approval of the Settlement Agreement on May 31, 2016 (ECF 90), which the Court granted on July 10, 2017. ECF 107.
The Settlement Class
On July 10, 2017, the Honorable Richard D. Bennett of the United States District Court for the District of Maryland issued the Order Preliminarily Approving Settlement on behalf of the following Class:
All vested or non-vested present and past participants of the Plans (or their beneficiaries) as of the Effective Date of Settlement.
The Settlement resolves all claims against the Bon Secours Defendants and applies to all past and present, vested and non-vested, participants in the Plans and their beneficiaries. The Settlement provides specific benefits to two groups of people, described below. These groups do not overlap. If you are entitled to benefits under the Settlement, you can be in only one of the groups.
Group A includes current participants and beneficiaries in the Plans. “Current participants” includes active participants and inactive participants with deferred vested benefits in the Plans.
The Plans will receive a total cash contribution of $98,000,000 ($98 million), payable in $14 million installments over seven years. The cash contributions will benefit the current participants in Group A by making their retirement benefits more secure. The contributions will be distributed among the seven Plans proportionally depending on the relative funded status of each Plan. Because the Plans are defined benefit pension plans, the aggregate total of the $98 million cash amount will be contributed to the Plans as a whole and will not increase any participant’s accrued pension benefit. Your individual pension benefit will not increase as a result of this Settlement. Rather, the $98 million contribution will be used to pay retirement benefits to the Plans’ participants and beneficiaries that are or will become eligible to receive benefits according to the terms of the Plans, along with Plan expenses. Therefore, by improving the funded status of the Plans, the Settlement increases retirement security for current participants in Group A.
The $98 million figure represents the total amount of the Plans’ underfunding on an ERISA basis at the time the Settlement was reached. The Settlement also provides significant financial and administrative protections through August 31, 2025, such as a guarantee of the accrued benefits owed to participants under the terms of the Plans, an anti-cutback provision, and requirements regarding information disclosure to participants in the Plans. These non-monetary protections are described in greater detail in Section 3 of the Class Notice, as well as in Sections 7.1.1 and 8 of the Settlement Agreement.
Group B includes former participants in the Hampton Roads Plan who were credited with more than three years of vesting service, but fewer than five years of vesting service under the Plan’s terms.
The Hampton Roads Plan is the only Plan that uses a “cash balance formula and requires that a participant have five years of vesting service in order to be 100% vested in their benefits. Since January 1, 2008, ERISA has required that cash balance benefits must be 100% vested after three years of vesting service (one year of vesting service is any given calendar year during which one has worked at least 1,000 hours). Individuals in Group B left covered employment with Bon Secours after January 1, 2008 with more than 3 but fewer than 5 years of vesting service, and with a positive account balance as of January 1, 2016. As a resul, they did not become fully vested in their cash balance benefits according to the terms of the Hampton Roads Plan. The lawsuit claims that this vesting schedule violated ERISA.
As consideration for the release of this claim, Defendants will pay $300,000 in total to the 530 members of Group B. The $300,000 payment will be distributed to Group B members on a proportional basis dependent on the value of each individual’s cash balance account as of January 1, 2016. This payment will be made within thirty days of the Effective Date of the Settlement. The Effective Date of Settlement is sixty days after the Court enters final approval of the Settlement. For more details about Group B, see Section 3 of the Class Notice, as well as Section 7.1.2 of the Settlement Agreement.
Released Claims and Fairness Hearing
The Class Representatives and their attorneys believe that this Settlement is in the best interests of the Class members. As a result of the Settlement, the Class releases certain claims against Defendants pertaining to the Church Plan exemption. (These claims are defined in the Settlement Agreement).
The Court will hold a Fairness Hearing to consider the fairness of the proposed Settlement. The Fairness Hearing will be held on November 28, 2017, at 4 p.m., before the Honorable Richard D. Bennett in the United States District Court for the District of Maryland, Baltimore Division, 101 West Lombard Street, Baltimore, MD 210201. The Court will also hear any objections and arguments concerning the proposed Settlement’s fairness at that time. No benefits can be issued to Class members until after the Court grants final settlement approval.
To learn more about the terms of the proposed Settlement, your options, and how your legal rights may be affected, please review the Notice of Proposed Settlement, Case Documents and answers to the Frequently Asked Questions provided on this website.
Preliminary Approval Order Entered July 10, 2017
Notice Mailed to Class Members September 11, 2017
Objection to the Settlement – October 31, 2017
must be postmarked by this date!
Notice of Intention to Appear (at the Fairness Hearing) –
must be postmarked by this date! November 5, 2017
Fairness Hearing November 28, 2017
For questions about the Settlement Agreement and which Group you are in:
Call the Bon Secours Health System, Inc. Human Resources Operations Center at
(804) 887-7600 or (855) 336-7600
For all other questions:
Cohen Milstein Sellers & Toll, PLLC
1100 New York Avenue, N.W., Fifth Floor
Washington, D.C. 20005
Class Counsel has established a toll-free number for your questions or comments: 1-866-302-1322. (Please state that you are calling about the Bon Secours Settlement). Class Counsel may also be contacted via email at BonSecoursSettlement@cohenmilstein.com.
Please do not contact the Court. Its personnel will not be able to answer your questions.
Frequently Asked Questions
Following is a list of frequently asked questions about this settlement. We will update any answers that need updating periodically, to reflect the current status of the settlement.
Q: How do I know whether I am part of the Settlement Class?
You are a member of the Settlement Class if you are or were, on or before the date this Settlement becomes effective, a vested or non-vested participant in or beneficiary of the following defined pension Plans maintained and/or sponsored by Bon Secours: (1) Bon Secours Health System, Inc. Frozen Pension Plan, (2) Bon Secours Kentucky Health System, Inc. Pension Plan, (3) Bon Secours New York Health System Pension Plan, (4) Employees’ Retirement Plan of Bon Secours Baltimore Health Corporation, (5) Employees’ Retirement Plan of Bon Secours St. Mary’s Hospital, (6) Memorial Regional Medical Center Pension Plan, and (7) Retirement Plan of Bon Secours Hampton Roads.
Q: How will the Settlement be distributed?
Members of the Settlement Class do not need to do anything with respect to the Settlement in this Action. After the Final Approval Order approving the Settlement becomes Final and non-appealable, Bon Secours will begin making annual $14 million contributions to the Plans, for a total of $98,000,000 in contributions in the aggregate over seven years. Although the members of Group A will not receive any cash award or any change in the benefits due them under their Plans, these contributions will benefit members of Group A by improving the funding of their Plans and increasing their retirement security.
Bon Secours will cause checks to be issued to members of Group B at the time set forth in Section 3 of the Class Notice.
For more information about these payments, see Section 3 of the Class Notice.
Q: What does the Settlement provide?
The Settlement provides specific monetary and non-monetary benefits to two separate groups of Class members—Groups A and B—as described in detail in Sections 7 and 8 of the Settlement Agreement. You can be only in one group, based on your particular situation. The groups do not overlap.
Group A Settlement Benefits. Defendants will make an aggregate $98,000,000 contribution to the Plans over the course of seven years, with payments of $14 million each year. Bon Secours may make larger payments in any given year to reduce the contribution in following years. See Settlement Agreement Section 7.1.1. The contributions will be distributed among the seven Plans proportionally depending on the relative funded status of each Plan. The $98 million figure represents the collective amount of the Plans’ underfunding on an ERISA basis at the time the Settlement was reached. Additionally, the Settlement provides significant non-monetary protections for participants in the Plans through August 31, 2025. During that time, the Plans will remain Church Plans exempt from ERISA, but Defendants will guarantee that the Plans will have sufficient funds to pay the accrued benefits payable to participants under the terms of the Plans. Defendants have made similar financial commitments with respect to the Plans should there be a plan termination or merger. In addition, the Defendants have agreed that, until August 31, 2025, no amendment to a Plan shall decrease the accrued benefit of any participant in the Plans. The Settlement also includes equitable consideration, modeled after certain provisions of ERISA, concerning plan administration, summary plan descriptions, notices (pension benefits statements, current benefit values), and the Plans’ claim review procedure. These payments, and the non-monetary terms of the Settlement, benefit the current participants in and beneficiaries under the Plans, including retirees. For more details, see Sections 7.1.1 and 8 of the Settlement Agreement.
Group B Settlement Benefits. Defendants will pay $300,000 to the 530 former participants in the Hampton Roads Plan who left covered service under the Plan after January 1, 2008, having completing at least 3 but less than 5 years of vesting service, and who had a positive account balance as of January 1, 2016. The $300,000 payment to Group B will be distributed on a pro rata basis, so that each member of Group B will receive a share of the payment that is proportional to the value of his or her cash balance account as of January 1, 2016. See Settlement Agreement Section 7.1.2. Defendants will make this payment within thirty days of the Effective Date of the Settlement Agreement. The Effective Date of Settlement is thirty days after the Court enters final approval of the settlement, or after the date to appeal the settlement has run. Payments returned as undeliverable will be paid back to the Hampton Roads Plan.
All of the monetary and non-monetary relief described above constitutes consideration for release of all claims against Defendants, subject to the carve outs described below.
Some members of the Class will not receive any benefits under the Settlement because they are past participants who either: (i) did not vest in the Plans under the Plans’ terms and are not members of Group B; or (ii) elected and received a lump sum distribution of their full benefits due under the terms of their Plans.
Additionally, Defendants have agreed to pay up to $3,500,000 to be used to fund Class Counsel’s requested attorneys’ fees, out-of-pocket expenses, and incentive awards to the Named Plaintiffs. The District Court has the sole discretion as to whether to award attorneys’ fees, reimbursement of expenses, or incentive awards to the Named Plaintiffs and, if so, in what amounts up to $3,500,000. See Settlement Agreement Sections 7.1.4 and 7.1.5.
Q: What if I do nothing?
If you are a class member and you do not object or otherwise respond, you will participate in the Settlement as described in FAQ #3. If you are a member of Group B, you will receive a check thirty days after the Effective Date of Settlement. The Effective Date of Settlement is thirty days after the Court enters final approval of the settlement, or after the date to appeal the settlement has run.