Summary of the Lawsuit
This lawsuit, filed in the United States District Court for the Northern District of California (Case No. 3:13-cv-01450), alleges that the non-profit healthcare corporation Dignity Health (“Dignity”) is violating numerous provisions of the Employee Retirement Income Security Act (“ERISA”), while improperly claiming that the Dignity Health Pension Plans (“the Plans”) are exempt from ERISA’s protections because they are “church plans.” This lawsuit seeks to compel the Dignity Plans to comply with ERISA, and also seeks a declaration that the Plans do not qualify as a “church plans”.
Summary of the Claims
The Complaint alleges that the Plans are not a “church plans” because ERISA only exempts pension plans established and maintained by a “church or a convention or association of churches,” and Dignity, a healthcare corporation, does not qualify. The Complaint further alleges that Dignity and plan fiduciaries (collectively “Defendants”) are violating ERISA by:
- underfunding the Plans by over $1.2 billion;
- failing to provide 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 Dignity Health Pension Plan with the Secretary of Labor.
In addition, the lawsuit alleges that the church plan exemption, as claimed by Dignity, is a violation of the Establishment Clause of the First Amendment of the Constitution because it harms Dignity workers, puts Dignity competitors at an economic disadvantage, and relieves Dignity of no genuine religious burden.
This lawsuit is brought as a class action on behalf of all persons who, as of the date of the filing of the Complaint, were participants in, or beneficiaries of, the Dignity Plans.
Status of the Litigation
Plaintiffs filed their Complaint on April 1, 2013 in the United States District Court for the Northern District of California. On June 17, 2013, Defendants filed a motion to dismiss, which the Court denied on December 12, 2013. The Court ruled that the Dignity Plans do not qualify for church plan exemption under ERISA because only a church can sponsor and maintain a church plan. On July 22, 2014, the Court granted Plaintiff’s motion for partial summary judgment and denied the Defendants’ same motion, ruling that Plaintiff is entitled to declaratory relief. Defendants appealed the ruling.
On July 26, 2016, the Ninth Circuit affirmed the district court’s decision and ruled in the Plaintiff’s favor that a church plan must be established by a church or a convention or association of churches. This opinion was consistent with decisions from the Third and Seventh Circuits.
On August 29, 2016, Defendants filed a petition for a writ of certiorari, asking the Supreme Court to review the Ninth Circuit’s decision. The Supreme Court granted Defendants’ motion on December 2, 2016 and the case was consolidated with Stapleton v. Advocate Health Care Network and Kaplan v. St. Peter’s Healthcare System. Oral argument was held on March 27, 2017. On June 5, 2017, the Supreme Court ruled that an entity need not be a church to establish an ERISA-exempt church plan, reversing the decisions of the Third, Seventh, and Ninth Circuits.
In light of the Supreme Court ruling, Plaintiffs filed an Amended Class Action Complaint on November 3, 2017. On December 12, 2017, Defendants filed a Motion to Dismiss Plaintiffs’ Complaint, and a Request for Judicial Notice asking the Court to recognize the validity of certain documents. On February 9, 2018, Plaintiffs filed briefs in opposition to Defendants’ Motions to Dismiss and for Judicial Notice. On February 23, 2018, Defendants filed a Reply in Support of their motions. The hearing on Defendants’ Motions to Dismiss and for Judicial Notice is set to take place on March 22, 2018.
On June 28, 2019, Dignity announced that it has agreed to pay at least $100 million to settle a proposed class action accusing it of violating ERISA, while improperly claiming a religious exemption in an attempt to justify the underfunding of its pension plan by $1.8 billion. The proposed settlement – if approved – will require Dignity to pay its plan $50 million in 2020 and at least $50 million in 2021. In addition, Dignity committed to funding the plan until 2024, making the minimum contribution recommended by plan’s actuaries in each of the three years 2022 through 2024.
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.: firstname.lastname@example.org
Connor Grant-Knight, Paralegal: email@example.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 or 202-408-4600