- Employees at the recently-acquired Daughters of Charity Health System have filed a class-action lawsuit alleging that the hospital system improperly underfunded its pension plan by around $229 million by evading federal pension law requirements. The lawsuit impacts the pensions of 9,000 employees and retirees.
- According to the suit, Daughters of Charity classified its pension plan as a "church plan." Church plans are exempt from the Employee Retirement Income Security Act of 1974, the federal law that regulates pensions. Only actual churches are eligible for the exemption, and a previous ruling determined that plans like Daughters of Charity's do not qualify.
- Daughters announced on October 10 that it was selling to for-profit Prime Healthcare. Prime has neither committed to operating the plan under ERISA nor addressed the funding shortfall. It has also threatened that it will put the system into bankruptcy, increasing the risk to Daughters pension-holders.
The suit is backed by Service Employees International Union-United Healthcare Workers West (SEIU-UHW). According to president Dave Regan, "Daughters of Charity's decision to sell to Prime puts the future of nearly 9,000 employees and retirees at grave risk. This lawsuit will ensure that the obligations to people who have devoted their lives to serving the sick and poor at Daughters facilities, and who have done their life planning around receiving a pension, do not have the rug pulled out from under them."
The lawsuit may also be an effort by the union to derail the sale of Daughters to Prime. Immediately following the announcement of the sale, the union announced that thousands of employees would fight to halt the sale, claiming that Prime values the bottom line over its patients.
"It's disappointing and hard to understand how Daughters of Charity's current owners could turn their back on 100 years of serving the poor by selling to a company with Prime's history," said Regan.