Citing to the “significant uncertainties in predicting the outcome” of their litigation “where the critical issue is pending before the Supreme Court (oral argument on the scope of ERISA’s church plan exemption is set in three consolidated cases for March 27), Plaintiffs in Butler et al. vs. Holy Cross Hospital, another church plan class action, have filed an unopposed motion for preliminary approval of settlement.
In Butler, former employees of Holy Cross Hospital filed suit in June of 2016 in the United States District Court for the Northern District of Illinois on behalf of themselves and other participants of the Pension Plan for Employees of Holy Cross Hospital, alleging that Defendants breached duties under ERISA by incorrectly treating the Plan as an ERISA-exempt “church plan.” Among Plaintiffs’ allegations are that Defendants underfunded the Plan by $31 million and improperly attempted to terminate the Plan while it was underfunded.
The Plan was originally sponsored by Holy Cross Hospital, which transferred plan sponsorship and liabilities to the Sisters of Saint Casimir shortly before the hospital’s merger with Sinai Health System. Plaintiffs allege that this transfer was an unlawful attempt to avoid liability for the Plan’s underfunding. They claim that upon the Plan’s purported termination, Defendants offered participants a discounted distribution based on incorrect classification of the Plan as a church plan.
The parties’ settlement provides for a settlement amount of approximately $9 million, which would consist of $4 million paid by Defendants into an escrow account (less attorney’s fees not to exceed 15% of the amount in escrow), as well as approximately $5 million in Plan assets held in trust that have not yet been distributed. According to the motion, after notice and administrative costs, Defendants anticipate that approximately $8.4 million will be available for distribution to Plan participants. After final distribution of the settlement amount will the Plan be fully liquidated and formally terminated.