Chicago Hospital Accused of Illegally Transferring Pension Liabilities to Order of Nuns

Holy Cross Hospital in Chicago was accused by a group of former employees of illegally categorizing its pension plan as a church plan so that it would be exempted from ERISA regulations.

In the 12-count complaint filed against the Chicago hospital, the hospital allegedly retroactively claimed a church plan classification in 1993. Church plans are exempt from the Employee Retirement Income Security Act that mandates pension plans to have sufficient fund allocation to provide the promised benefits to employees.

Read more about the issue at Becker’s Hospital Review:

In 2013, when Holy Cross merged with Chicago-based Sinai Health System, the plan was allegedly underfunded by $31 million. At that time, the hospital allegedly illegally transferred liability for the pension plan to an order of nuns called the Sisters of Saint Casimir of Chicago.

Two years later, the Sisters of Casimir announced that the pension plan would be terminated. The benefits were paid out in lump sums, which were calculated using discount rates that would not have been available under ERISA, according to the report.

In their lawsuit, the former Holy Cross workers are seeking class treatment for about 2,000 participants in the pension plan. They also seek a declaration that the plan is governed by ERISA and damages for the allegedly improper termination of the plan.

In their lawsuit, the former Holy Cross workers are seeking class treatment for about 2,000 participants in the pension plan. They also seek a declaration that the plan is governed by ERISA and damages for the allegedly improper termination of the plan.

Based on the reports by Bloomberg BNA, there are 30 similar cases that involve numerous healthcare companies with religious affiliations over the past three years.