A Missouri federal judge granted preliminary approval on Thursday to a $60 million deal to resolve a proposed class action claiming SSM Health Care Corp. misused an Employee Retirement Income Security Act exemption intended for churches and their affiliates.
U.S. District Judge Henry Edward Autrey said the settlement offers “real and substantial” benefits to SSM Health employee retirement plan participants, who accused the hospital system of exaggerating its connection to the Catholic Church in order to secure an ERISA exemption that allowed it to underfund its plan by roughly $813 million.
The settlement requires SSM Health to fully fund the plan for 10 years, deposit $15 million per year in the plan from 2019 to 2022 and make additional payments to workers who received their retirement savings in a lump sum.
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The participants, who announced their intention to settle in October, presented their motion for preliminary approval of the deal to Judge Autrey on Wednesday, saying the deal would produce a fair result for SSM Health’s nearly 35,000 employees.
If approved, the settlement would require SSM Health to commit to fully funding its retirement plan for 10 years. The deal would also force SSM Health to pay $15 million to the plan each year from 2019 to 2022, bringing the hospital system’s total settlement-imposed plan contributions to $60 million.
Finally, the settlement would compel SSM Health to make additional payments to workers who took lump-sum payments from the retirement plan. The employees accused SSM Health of shorting those workers by calculating lump-sum payments using a less generous formula than ERISA's.
The employees are represented by Laura R. Gerber, Lynn Lincoln Sarko and Ron Kilgard of Keller Rohrback LLP, Mark K. Gyandoh of Kessler Topaz Meltzer & Check LLP, Karen L. Handorf, Michelle Yau and Mary Bortscheller of Cohen Milstein Sellers & Toll PLLC, Douglas P. Needham, Mark P. Kindall and Robert A. Izard of Izard Kindall & Raabe LLP and Matthew H. Armstrong of Armstrong Law Firm LLC.
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