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Holy Cross Hospital Settles ERISA Suit for $4M

In June 2016, Corinne Butler ("Butler") and Andrea Fitzsimmons ("Fitzsimmons"), former employees of Holy Cross Hospital ("Holy Cross"), filed a lawsuit against their employer alleging it underfunded their pension plan by $31 million and terminated the plan in violation of the Employee Retirement Income Security Act ("ERISA"). Butler and Fitzsimmons demanded their pension plan be reinstated and properly funded on behalf of 2,000 Holy Cross employees.

Allegedly, right before Holy Cross merged with Sinai Health System in 2013, it transferred its pension plan sponsorship to the Sisters of Saint Casimir of Chicago ("SSC"), which is a community of nuns with few assets. The transfer changed the definition of "employer" to the SCC, despite the fact that none of the employees worked for the SSC. Two years after the SSC became the plan's sponsor, it told Holy Cross employees that the plan would be ended and the distributed benefits would be drastically less than what was originally expected. As a result, some participants were paid less than half of what they were owed.

Holy Cross argued that its church affiliation exempted it from ERISA, but the Seventh Circuit had ruled, shortly before the case began, that ERISA's church plan exemption did not extend to religious hospitals. Holy Cross expressed concern that if it were forced to pay the $31 million that was supposedly owed, it would go bankrupt. Thus, the opposing parties entered into mediation soon after the case was filed. In the end, the two parties were able to negotiate $4 million to settle the suit for former plan participants, along with $5.1 million in undistributed plan trust assets. U.S. District Judge Manish Shah granted preliminary approval of the settlement, which would give class members a chance to object between now and the scheduled final approval hearing in June 2017.

The legal team at SFMS has substantial experience litigating employment matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier ([email protected]) or Chiharu Sekino ([email protected]). We can also be reached toll-free at (866) 540-5505.

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Corso, Jessica. "Hospital To End ERISA Suit With $4M Payment." Law360. Last modified on March 10, 2017.

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