Summary of the Lawsuit

This lawsuit, filed in the Northern District of Illinois (1:14-cv-01873), alleges that the non-profit healthcare corporation Advocate Health Care Network and Subsidiaries (“Advocate”) is violating numerous provisions of the Employee Retirement Income Security Act (“ERISA”), while improperly claiming that the Advocate Health Care Network Pension Plan (the “Advocate Plan”) is exempt from ERISA’s protections because it is a “church plan.” This lawsuit seeks to compel the Advocate Plan to comply with ERISA, and also seeks a declaration that the Plan does not qualify for church plan exemption.

Summary of the Claims

The Complaint alleges that the Plan is not a “church plan” because ERISA only exempts pension plans established and maintained by a “church or a convention or association of churches,” and Advocate, a healthcare corporation, does not qualify. The Complaint further alleges that Advocate and plan fiduciaries (collectively “Defendants”) are violating ERISA by:

  • underfunding the Plan;
  • failing to establish a trust to hold the assets of the Plan  that is insured through the Pension Benefit Guarantee Corporation;
  • requiring participants to complete five years of vesting service to become fully vested in the plan;
  • failing to furnish members of the proposed Class with Pension Benefit Statements, Summary Annual Reports, Notifications of Failure to Meet Minimum Funding, or Funding Notices; and
  • failing to file an annual report with respect to the Advocate Plan with the Secretary of Labor.

In addition, the lawsuit alleges that the church plan exemption, as claimed by Advocate, is a violation of the Establishment Clause of the First Amendment of the Constitution because it is not necessary to further the stated purposes of the exemption, harms Advocate workers, puts Advocate competitors at an economic disadvantage, relieves Advocate of no genuine religious burden, and creates more government entanglement with alleged religious beliefs than compliance with ERISA creates.

Class Action

This lawsuit is brought on behalf of all participants or beneficiaries of the Advocate Health Care Network Pension Plan.

Excluded from the Class are any high-level executives at Advocate or any employees who have responsibility or involvement in the administration of the Plan, or who are subsequently determined to be fiduciaries of the Advocate Plan, including the Individual Defendants.

Status of the Litigation

Plaintiffs filed their Complaint on March 17, 2014 in the United States District Court for the Northern District of Illinois. On June 2, 2014, Defendants filed a Motion to Dismiss, which the Court denied on December 31, 2014. The Court held that only a church or convention or association of churches may establish an ERISA-exempt church plan, and that Advocate’s Plan is not entitled to ERISA’s church plan exemption because it was not established by a church.

Following the District Court’s ruling, Defendants filed a Motion for Interlocutory Appeal and for Stay of Proceedings, asking the District Court to certify their December 31, 2014 Order for appeal to the Seventh Circuit. The Court granted the Motion for Interlocutory Appeal on January 21, 2015, and certified the following question: “In order for an employee benefit plan to qualify as a ‘church plan’ under ERISA, 29 U.S.C. § 1003(b)(2) and § 1033, must the plan be established by a church (or by a convention or association of churches)?” The Seventh Circuit granted Defendants petition for leave to appeal on February 18, 2015. 

On March 17, 2016, the Seventh Circuit Court of Appeals affirmed the district court’s decision and ruled that the Advocate Health Care Network’s Pension Plan is ineligible for church plan exemption because it was not established by a church.  This opinion is consistent from decisions by the Third and Ninth Circuits.

On July 15, 2016, Defendants filed a petition for a writ of certiorari, asking the Supreme Court to review the Seventh Circuit’s decision. The Supreme Court granted Defendant’s’ motion on December 2, 2016, and the case was consolidated with Rollins v. Dignity Health and Kaplan v. St. Peter’s Healthcare System. Oral argument was held on March 27, 2017. The Supreme Court is expected to rule by June 2017 on the question of whether a non-church organization may nevertheless claim the church plan exemption from ERISA’s protections.

Whom to Contact for More Information

If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:

Karen L. Handorf, Esq.: khandorf@cohenmilstein.com
Mary J. Bortscheller, Esq.: mbortscheller@cohenmilstein.com
Maria Dewees, Paralegal mdewees@cohenmilstein.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, NW, Suite 500
Washington, DC 20005
Telephone:  888-240-0775 (Toll Free) or 202-408-4600