Summary of the Lawsuit

This lawsuit alleges that the non-profit healthcare corporations St. Anthony Medical Center, Inc. (“SAMC”) and the Franciscan Sisters of Chicago Service Corporation (“FSCSC”) violated numerous provisions of the Employee Retirement Income Security Act (“ERISA”), while wrongfully claiming that the St. Anthony Medical Center Retirement Plan (the “Retirement Plan” or the “Plan”) is exempt from ERISA’s protections because it is a “Church Plan.”  Defendants’ failure to properly maintain and operate the Retirement Plan under ERISA harmed the 1,900 Plan participants who suffered cutbacks of up to 40% of their pension benefits when Defendants purportedly terminated the Retirement Plan in April 2012.

Summary of the Claims

The Complaint alleges that Defendants wrongfully claimed that their Retirement Plan was exempt from ERISA’s protections because it is a “Church Plan.”  As a result of the church plan exemption claimed by SAMC and FSCSC, the Retirement Plan does not comply with many of the protections afforded to plan participants under ERISA.  The Complaint alleges that the church plan exemption was intended to apply only to plans that were started or administered by churches themselves or conventions or associations of churches.  The Complaint alleges that the Retirement Plan is not a “Church Plan” because neither SAMC nor FSCSC is a church or a convention or association of churches, and because the Retirement Plan was not established by a church or by a convention or association of churches.  The Complaint further alleges that the Defendants breached their duties under ERISA by, among other things: underfunding the Retirement Plan by over $32 million; failing to furnish Plaintiffs or any member of the class with a Pension Benefit Statement, Summary Annual Reports, Notification of Failure to Meet Minimum Funding, or Funding Notices; and failing to file an annual report with respect to the Retirement Plan with the Secretary of Labor.  The Complaint alleges that, following the declared termination of the Retirement Plan in 2012, Plan participants received pension benefits which were substantially less than the actuarial equivalent of the pension benefits which they had been promised and had accrued under the Plan.

In addition, the lawsuit alleges that the church plan exemption, as claimed by SAMC and/or FSCSC, is a violation of the Establishment Clause of the First Amendment of the Constitution because it harms SAMC workers, puts SAMC’s competitors at an economic disadvantage, relieves SAMC and/or FSCSC of no genuine religious burden, and creates more government entanglement with alleged religious beliefs than compliance with ERISA creates.

Class Action Allegations

This lawsuit is brought on behalf of the following persons:  All participants and beneficiaries of the Retirement Plan, a defined benefit pension plan that was established, maintained, administered and sponsored by SAMC and FSCSC as of the date of the filing of the Complaint.

Status of the Litigation

Plaintiffs filed their Complaint on June 2, 2014 in the United States District Court for the Northern District of Illinois. On October 24, 2014 Plaintiffs filed their Amended Complaint, naming Franciscan Communities, Inc., Franciscan Holding Corporation, and individual members of the St. Anthony Medical Center Retirement Committee and FSCSC Board of Directors as defendants. Plaintiffs filed their Motion for Class Certification and Appointment of Class Counsel on November 24, 2014. Defendants filed their Motion to Dismiss on December 3, 2014, to which Plaintiffs filed their Opposition on January 7, 2015.

On June 18, 2015, Judge Johnson Coleman issued an order deferring Defendants’ Motion to Dismiss until further notice, to allow time for the Court and the parties to receive and consider the question certified to the United States Court of Appeals for the Seventh Circuit in Stapleton v. Advocate Health Care Network (Case No. 15-1368).

On August 31, 2015, Judge Johnson Coleman issued an order denying Plaintiffs’ Motion to Certify a Class and for Appointment of Class Counsel without prejudice and with leave to refile.

The case was largely stayed throughout 2016 and 2017, during which the parties awaited a Supreme Court ruling in Advocate Health Care Network v. Stapleton 137 S. Ct. 1652, 198 L. Ed. 2d 96 (2017). Following the Supreme Court ruling issued in June 2017, Plaintiffs moved to amend the complaint in August 2017. The Court granted the motion, and Plaintiffs filed their Third Amended Complaint in December 2017.

In January 2018, Defendants moved to dismiss the complaint on statute of limitations grounds. The motion to dismiss was fully briefed by both Plaintiffs and Defendants by March 2018. On September 29, 2018 the Court issued an almost fully favorable ruling for Plaintiffs on Defendants’ motion to dismiss, denying the motion as to all counts except Plaintiffs’ alternative claim for unjust enrichment with leave to replead the claim.

The case name is: Owens et al v. St. Anthony Medical Center Inc. et al., Case No. 1:14-cv-04068, U.S. District Court, Northern District of Illinois.