This lawsuit, filed on April 22, 2016 in the Northern District of Illinois, Eastern Division, alleges that the non-profit healthcare system Franciscan Alliance improperly claims that their defined benefit pension plans qualify as a “Church Plan” under the Employee Retirement Income Security Act (“ERISA”). In operating their plan as a “Church Plan,” Franciscan Alliance does not comply with many protections afforded to pension beneficiaries under ERISA. The lawsuit seeks to compel the Franciscan Alliance defined benefit pension plans to fully comply with ERISA.

Summary of the Claims

The Complaint alleges that Franciscan Alliance is violating numerous provisions of ERISA, while wrongfully claiming that their retirement plan is exempt from ERISA’s protections because it is a “Church Plan.” The Complaint alleges that the plan is not a “Church Plan” because Franciscan Alliance is not a church or a convention or association of churches, and because the retirement plan was not established by a church or a convention or association of churches.  The Complaint further alleges that Franciscan Alliance breached their duties under ERISA by, among other things:

  • underfunding the plan by at least $130.5 million;
  • impermissibly requiring participants to complete five years of service before participants became fully vested in their accrued benefits;
  • failing to furnish Plaintiffs or any member of the class with a Summary Plan Description, Pension Benefit Statement, Summary Annual Reports, Notification of Failure to Meet Minimum Funding, or Funding Notices;

In addition, the lawsuit alleges that the church plan exemption, as claimed by Franciscan Alliance, is a violation of the Establishment Clause of the First Amendment of the Constitution because it harms Franciscan Alliance workers, puts Franciscan Alliance’s competitors at an economic disadvantage, relieves Franciscan Alliance 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 as a class action on behalf on behalf of all participants and beneficiaries of the defined benefit pension plans that are established, maintained, administered and/or sponsored by Franciscan Alliance (or its successors), Franciscan Alliance’s affiliates and/or by Franciscan Alliance’s committees, and operated as or claimed to be “church plans,” (collectively referred to as the “Franciscan Alliance Plan”) including the Franciscan Alliance Pension Security Plan. The proposed class includes 14,600 employees and former employees.

Status of the Litigation

On September 8, 2016, this case was consolidated with another class action case and transferred to the United States District Court for the Northern District of Indiana under case number 3:16-cv-290. The court appointed Kessler Topaz Meltzer & Check, LLP and Cohen Milstein Sellers & Toll PLLC as Co-Interim Lead Class Counsel to represent the plaintiffs in this litigation Plaintiffs filed a consolidated amended complaint on August 28, 2017. Defendants filed a Motion to Dismiss and Motion Requesting Oral Argument on October 27, 2017. Plaintiffs responded to the Motion to Dismiss on December 26, 2017. Judge Robert L. Miller denied Defendants' Motion to Dismiss in full on March 27, 2019, allowing Plaintiffs' twelve claims to proceed. 

Whom to Contact for More Information

If you are or were a participant or beneficiary of the Franciscan Alliance Retirement Plan, or if you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:

Karen L. Handorf, Esq.,
Jamie L. Bowers, Esq.,
Dirk Hamel, Paralegal,

Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Fifth Floor
Washington, D.C. 20005
Telephone:  888-240-0775 (Toll Free) or 202-408-4600