March 27, 2019

An Indiana federal judge refused Wednesday to toss claims that a hospital network exaggerated its connection with the Catholic Church to obtain an exemption from the Employee Retirement Income Security Act before shorting its pension plan by $320 million.

U.S. District Judge Robert L. Miller Jr. wrote in his opinion and order that he "can’t tell at this stage" whether Franciscan Alliance Inc.'s pension plan qualified for the exemption, so it doesn't make sense to grant Franciscan's motion to dismiss the proposed class action.

He rejected the hospital network's argument that the plaintiffs — a group of retirees seeking to represent everyone who pays into or benefits from Franciscan's pension plan — didn't have grounds to file the suit.

Franciscan claimed that in order to sue, the proposed class needed to show either that retirees' benefits were reduced, that the plan was about to run out of money, or that the hospital network couldn't make up the alleged $320 million shortfall.

Judge Miller said this was not so. Rather, the proposed class simply needed to show that its risk of being injured by Franciscan's actions was "substantial and imminent," he said, adding that the retirees succeeded in doing so. 

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The proposed class is represented by Mark K. Gyandoh of Kessler Topaz Meltzer & Check LLP, Karen L. Handorf, Michelle Yau and Julie Goldsmith Reiser of Cohen Milstein Sellers & Toll PLLC, Robert A. Izard, Mark P. Kindall and Douglas P. Needham of Izard Kindall & Raabe LLP, Lynn Lincoln Sarko, Erin M. Riley, Laura R. Gerber, Havila C. Unrein and Ron Kilgard of Keller Rohrback LLP, and Lynn A. Toops of Cohen & Malad LLP.

The complete article can be accessed here.