Welcome to the Chavies v. Catholic Health East (“CHE”) and Lann v. Trinity Health Corporation (“Trinity”) Settlement website. This website is intended to keep class members informed regarding the Class Action Settlement of two consolidated cases – Chavies v. Catholic Health East and Lann v. Trinity Health Corporation. While the District Court has approved the Notice of Proposed Settlement and ordered that certain documents filed with the Court be posted on this website, the content of this website is the responsibility of Plaintiffs’ Counsel, and has not been approved by the Court.
On May 31, 2017, the Honorable Peter J. Messitte granted Final Approval of the Settlement. The Settlement is now Final.
The CHE case was filed in federal district court in Pennsylvania on March 28, 2013 against Catholic Health East (“CHE”) and various individual Defendants. The Trinity case was filed in federal district court in Maryland on July 11, 2014 against Trinity Health Corporation and CHE Trinity Inc. (collectively, “Trinity”) and various individual Defendants.
The Trinity case and the CHE case relate to the following defined benefit pension plans maintained by CHE and Trinity (collectively, the “Plans”):
- Trinity Health Pension Plan
- Trinity Health Pension Plan – Sisters of the Holy Cross Sponsored Ministries
- Retirement Plan for Employees of the University of Detroit Mercy
- Catholic Health East Employee Pension Plan
- Pension Plan of Mercy Health System for Collectively Bargained Colleagues
- Group Pension Plan for Employees of Mercy Center for Health Services
- Pension Plan for Employees of St. Mary’s Hospital Corporation
- Pension Plan for Employees of Uihlein Mercy Center, Inc.
- Mercy Life Center Corporation Pension Plan.
The complaints allege that CHE and Trinity denied the Plans’ participants and beneficiaries the protections of the Employee Retirement Investment Security Act (“ERISA”) by claiming that their Plans are “church plans” which are exempt from ERISA. The complaints allege that because the Plans are not “church plans,” CHE and Trinity violated ERISA in a variety of ways. The complaints also allege that application of the church plan exemption to the Plans would violate the Establishment Clause of the Constitution.
The CHE Defendants filed a motion to dismiss the CHE Complaint on June 17, 2013, arguing a) that the court lacked subject matter jurisdiction over the case because CHE’s Plan was not governed by ERISA; and b) that the church plan exemption did not violate the Establishment Clause. The court denied CHE Defendants’ motion on March 28, 2014, and ordered the parties to engage in jurisdictional discovery on whether CHE was a “church” within the meaning of ERISA’s church plan exemption.
Similarly, on October 6, 2014, the Trinity Defendants filed a motion to dismiss, arguing that the church plan exemption applies to plans established by “an organization that is controlled by or associated with a church.” On February 24, 2015, the court granted the Trinity Defendants’ partial motion to dismiss, holding that an organization “controlled by or associated with a church or convention of churches” could establish a church plan. The Trinity Defendants filed a second motion to dismiss on April 10, 2015 on the basis that Trinity Health was controlled by and/or associated with the Catholic Church, and thus the Trinity Plan was appropriately subject to the church plan exemption.
CHE and Trinity merged in 2014, after the CHE case was filed. While the parties were undergoing jurisdictional discovery in CHE and the second motion to dismiss was pending in the Trinity case, the Trinity and CHE Defendants jointly negotiated a settlement with counsel for Plaintiffs in both lawsuits. In conjunction with this Settlement, Plaintiffs filed stipulations of dismissal without prejudice as to the individual defendants in each case (, and transferred the CHE case to the U.S. District Court for the District of Maryland for consolidation with the Trinity case, solely for purposes of settlement.
The Settlement Class
On May 31, 2017, the Honorable Peter J. Messitte granted Final Approval of the ERISA Settlement on behalf of the following class:
- All participants (whether vested or non-vested) in or beneficiaries of any of the Plans identified in Schedule A of the Settlement Agreement on or before the Effective Date of Settlement.
The Settlement, which is now final, provides specific benefits to three groups of people, to settle all claims against Defendants. These groups do not overlap. If you are covered by the Settlement and in one of the benefited groups, you can only be in one of the groups. If you are in either Group B or C, you received by mail a separate letter with the Class Notice stating that you are a member of Group B or C. If you did not receive a separate letter with the Class Notice stating you are in Group B or C, then you are in Group A.
Group A includes current participants and beneficiaries in the Plans, including current retirees. For vested participants in the Plans, including those who are receiving retirement benefits and participants who are no longer employed by Trinity, CHE, or another participating employer in the Plans, the Settlement provides for a total cash contribution of $75 million over three years to the Plans which will be used to pay retirement benefits to Plan participants and beneficiaries that are or will become eligible to receive benefits. Because the Plans are defined benefit pension plans, the aggregate total of the $75 million cash amount will be contributed to the Plans as a whole and will not increase any participant’s accrued pension benefit. Rather, the $75 million contribution will benefit all members of Group A by increasing the retirement security of their individual benefits—that is, the cash amount will help ensure that there are sufficient funds available to pay individual benefits.
The Settlement also includes other non-monetary protections for participants in the Plans for fifteen years from the Effective Date of Settlement which mimic certain provisions of ERISA. Specifically, while the Plans will remain church plans, Defendants will guarantee that the Plans have sufficient funds to pay the accrued benefits payable to participants under the terms of the Plans, including in the event of a potential merger or plan termination. Further, Defendants will guarantee that no amendment to a Plan will decrease the accrued benefit of any participant. Finally, under the Settlement, Defendants are subject to ERISA-like requirements concerning plan administration, summary plan descriptions, notices like pension benefits statements, and the Plans’ claim review procedure. Members of Group A will not receive any of the benefits of Group B or C.
Group B includes 219 participants who are former employees of the CHE System Office, Watertown, and the Sisters of Providence Health System, who received lump sum distributions of their benefits during the 2014 Lump Sum Window offered by CHE and Trinity. As part of the Lump Sum 2014 window, certain participants’ benefits under the Plans had to be converted to lump sum amounts in order to be paid in the form of a lump sum. Based on the terms of the Plans, the interest rate used to compute the lump sum benefit of these 219 participants was higher than the ERISA interest rates, resulting in a lower lump sum amount than if the ERISA interest rates had been used. Pursuant to the Settlement, each of these 219 individuals will receive a one-time lump sum payment of $1,600.00. If you did not work for CHE System Office, Watertown, or the Sisters of Providence Health System CHE and receive a lump sum payment in 2014, you are not in Group B. Defendants will make the payment within thirty days after the Settlement becomes Final. Members of Group B will not receive any of the benefits of Group A or C.
Group C members are the 7,371 former employees who were credited with at least three, but less than five, years of vesting service in the Plans before they left employment. Several of the Plans with a cash balance or pension equity benefit formula required that a participant be credited with five years of “vesting service” in order to be 100% vested in the Plans. Pursuant to the Settlement, participants who had a cash balance or pension equity benefit under the Plans and who had been credited with at least three but less than five years of “vesting service” will receive a one-time lump sum payment of $176.36 each. Defendants will make the payment within thirty days after the Settlement becomes Final. Members of Group C will not receive any of the benefits of Group A or B.
The total monetary consideration provided under the Settlement is $75,000,000 for Group A and $1,650,400 for Groups B and C combined. As described above, the Settlement also includes significant non-monetary equitable consideration for Group A members, in that participants in the Plans will receive certain ERISA-like financial and administrative protections.
Additionally, the Settlement acknowledges that one of four potential events could impact the Settlement Class. These four potential contingencies are:
- the U.S. Supreme Court holds that the church plan exemption is unconstitutional, or holds that the church plan exemption is constitutional but that a church plan must be established by a church or a convention or association of churches;
- the Internal Revenue Service (“IRS”) issues a written ruling that the Plans do not qualify as church plans under the Internal Revenue Code;
- the Roman Catholic Church disassociates itself from Trinity; or
- the U.S. Congress amends ERISA to specify that a church plan must be established by a church or a convention or association of churches.
Mindful of these possibilities, Plaintiffs and Class Counsel sought to best protect the Settlement Class by allowing the Class to get the benefit of certain developments in the litigation landscape which would positively impact the Class’s claims. These benefits are reflected in the release provision of the Settlement Agreement, which contains a series of specific carve outs that would be triggered prospectively by any one of the four possible contingencies. The carve outs from the release of claims allow all class members to pursue their prospective claims for relief if any of the four positive developments occur.
However, even if one of the carve outs listed above is triggered, Group A will receive the first $25 million payment to the Plans and Groups B and C still will receive the payments described above as consideration to release their claims. None of these payments can be clawed back.
Notably, Plaintiffs and the entire Settlement Class will be in the same or in a better position with respect to their prospective benefits under the Plans, regardless of whether the contingent carve outs are triggered. In other words, the contingencies could only positively impact the prospective rights of the Plaintiffs and the Settlement Class as the occurrence of any one of them may require church-affiliated hospitals that establish church plans to comply with ERISA.
Finally, the Defendants have also agreed to set up a separate fund of no more than $8 million dollars for Class Counsel’s attorneys’ fees, for out of pocket expenses and for incentive payments to the Named Plaintiffs and to Plaintiff Mary Beth Henrick. Any request for attorneys’ fees, reimbursement of expenses, and payments to the Plaintiffs must be reviewed and approved by the Court. Any amount awarded by the Court will not reduce the $75 million payment to the Plans.
Released Claims and Fairness Hearing
On May 31, 2017, the District Court held a Fairness Hearing and granted Named Plaintiffs’ request for final approval of the Settlement, for class certification, for an award of attorneys’ fees and expenses, and for an Incentive Fee to Named Plaintiffs and granted Final Approval of the Settlement. The Settlement is now Final.
Q: How do I know whether I am part of the Settlement?
The Court has certified both the CHE Action and the Trinity Action as a class action for settlement purposes only. You are a member of the Settlement Class if you are or were a vested or non-vested participant in or beneficiary of the defined benefit pension Plans maintained and/or sponsored by Trinity and claimed to be Church Plans including: Trinity Health Pension Plan, Trinity Health Pension Plan – Sisters of the Holy Cross Sponsored Ministries, Retirement Plan for Employees of the University of Detroit Mercy, Catholic Health East Employee Pension Plan, Pension Plan of Mercy Health System for Collectively Bargained Colleagues, Group Pension Plan for Employees of Mercy Center for Health Services, Pension Plan for Employees of St. Mary’s Hospital Corporation, Pension Plan for Employees of Uihlein Mercy Center, Inc., and Mercy Life Center Corporation Pension Plan, on or before the date this Settlement becomes final.
Q: What does the Settlement provide?
The Settlement provides specific monetary and non-monetary benefits to three separate groups of class members—Groups A, B and C—as described above and in detail in Sections 8 and 9 of the Settlement Agreement. You can only be in one group, based on your particular situation. The groups do not overlap.
Q: What group am I in for purposes of the Settlement?
As described above and in the Class Notice, the Settlement provides specific benefits to three, non-overlapping groups of people – Groups A, B, and C. If you are covered by the Settlement and in one of the benefited groups, you can only be in one of the groups. All Settlement class members will receive a Class Notice in the mail. If you only receive the Class Notice, this means you are in Group A. If you receive a second letter stating that you are in Class B, you are ONLY in Group B; likewise, if you receive a second letter stating that you are in Class C, you are ONLY in Group C.
If you are still not sure which Group you fall into, or whether you fit the description for any group, you can call Rust Consulting, the claims administrator for the Settlement, at (866) 216-0278. To ask a Rust representative which Group you are in, dial “0” from the Main Menu, then dial “0” again when you hear the recording.
Q: How will the Settlement be distributed?
Members of the Settlement class do not need to do anything with respect to the Settlement in this Action. Thirty (30) days after the Final Approval Order approving the Settlement becomes Final and non-appealable, Trinity will make the first of three annual $25 million contributions to the Plans, totaling a $75 million contribution, in the aggregate, to the Plans, for the benefit of members of Group A.
Trinity, through a claims administrator, Rust Consulting, will issue checks to members of Groups B and C, who are not current participants in the Plans, at the time set forth in Section 3 of the Class Notice.
If you are a Settlement class member and you have questions regarding the Settlement Agreement and what Group you are in, please call the settlement administrator, Rust Consulting, at (866) 216-0278.
For inquiries about this Settlement, please email firstname.lastname@example.org. You may also contact Class Counsel at (888) 347-4600 if you have questions or comments (please state that you are calling regarding the Trinity Settlement).
Please do not contact the Court. Its personnel will not be able to answer your questions.