On November 19, 2018, Cohen Milstein, on behalf of current and former employees of Atrium Health, filed a putative class action against the healthcare provider to bring its retirement and health plans into compliance with ERISA and afford the plaintiffs class all the protections of ERISA.
Atrium Health claims that it is exempt from ERISA under the “Governmental Plan” exemption. But, Atrium has never satisfied the federal law definition of a governmental entity, so its claim of Governmental Plan status for the Plan fails. As a result of its false claims and failure to comply with ERISA, it is putting the retirement and health benefits of over 65,000 current and former employees in jeopardy by decreasing the security of employees’ retirement benefits, failing to disclose information about their benefits, and forcing participants to pay higher costs for healthcare coverage.
The Charlotte Mecklenburg Hospital Authority (d/b/a Atrium Health) is a non-profit healthcare conglomerate that is headquartered in Mecklenburg County, North Carolina and operates in three states. Atrium established and maintains at least three employee benefit plans—the Pension Plan of the Charlotte-Mecklenburg Hospital Authority (“Pension Plan”), the Carolinas HealthCare System 401(k) Matched Savings Plan (“401(k) Plan”), and the Carolinas HealthCare System LiveWELL Health Plan (“Health Plan”) (collectively, the “Plans”). Plaintiffs allege that none of these Plans comply with ERISA because Atrium erroneously claims that Atrium is a “governmental entity.”
Specifically, plaintiffs allege that Atrium has never satisfied the federal law definition of a government of a state, a government of a political subdivision, or an agency or instrumentality of such and, therefore, the Plans do not qualify as ERISA-exempt Governmental Plans. Atrium’s Plans were not established by a governmental entity, and more importantly, the Plans are not maintained by any governmental entity.
Instead, plaintiffs contend that the lack of control over Atrium by any state, political subdivision, or agency or instrumentality of such has allowed Atrium unfettered growth to expand its operations to three states. For example, Atrium’s governing body—the Board of Atrium Commissioners—is not controlled by any state or political subdivision thereof. Atrium’s daily operations are not controlled or overseen by officials of any state or political subdivision thereof. Atrium’s Board of Commissioners are not publicly nominated or elected—incoming Atrium commissioners are nominated by the Atrium Commissioners in a self-perpetuating cycle. Similarly, plaintiffs allege, Atrium’s employees are not treated in the same manner as government employees of any state or employees of any political subdivision thereof.
Rather, Atrium is a non-profit healthcare conglomerate that competes with other non-profit healthcare conglomerates in its commercial healthcare activities.
Background on the ERISA and the “Governmental Plan” Exemption
Congress enacted the Employee Retirement Income Security Act (“ERISA”) in 1974 to protect the interests of participants and beneficiaries in employee benefits plans. ERISA covers all employee benefit plans offered by employers to their employees, with a few narrow exceptions. One such exception is for a Governmental Plan—a plan “established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” ERISA § 3(32); 29 U.S.C. § 1002(32). The purpose of the Governmental Plan exemption, as it relates to plans established by States and their political subdivisions, was to eliminate federalism concerns. Additionally, Congress noted that governmental entities could fulfill their benefit obligations to employees through their taxing powers and, with respect to their defined benefit plans, did not have the same need for minimum funding standards and plan termination insurance as private entities.
The onus is on the employer to demonstrate that its plan satisfies the definition of the “Governmental Plan” exemption.
The case name is: Shore v. The Charlotte-Mecklenburg Hospital Authority (Atrium), Civil No. 1:18-CV-00961, U.S. District Court, Middle District of North Carolina
Questions About Joining the lawsuit
1100 New York Ave. NW
Washington, DC 20005