The Church Plan Cases at the Supreme Court: A Billion Here, A Billion There and Soon You Are Talking Real Money

Several years ago, when the first of the class actions were filed alleging that medical institutions were improperly claiming church plan status under ERISA, I was speaking on a panel at one of the American Conference Institute’s ERISA Litigation conferences, where I found myself eating lunch with two of the lead lawyers on those class action cases. I raised for them – and someone else would eventually ask the same question during their presentation on the church plan class actions – the question of damages. In particular, I wondered what they would ask for, and whether the defendants could afford it. I assumed that part of the relief would be to have the plans made compliant with the full panoply of ERISA’s procedural, notice, plan communication, claims processing, funding and other requirements. But that, I noted, was the easy part; it would only require the defendants to essentially hire really good ERISA lawyers and administrators and fix the plans. But what about the money? Could the defendants fund the massive shortfalls that the plaintiffs were claiming existed in the plans?

Well, of course they could, was the answer. And the size of some of the settlements of those actions to date indicate that truer words were never spoken. As Jacklyn Wille of Bloomberg BNA notes in this article, some of these lawsuits have been settled with the defendants agreeing to contribute from $75 million to as much as $350 million to the challenged pension plans. The defendants in these actions can, it appears, generally afford to fund the plans on the level required by ERISA. The numbers at issue across all of the targeted plans are breathtaking, running into the billions across all of the targeted entities and plans, making the stakes of the Supreme Court’s upcoming consideration of the scope of the exemption and whether these types of entities have properly invoked it among the highest – from a purely financial perspective – of any dispute I can recall coming before the Court recently. As Ms. Wille writes, “the lawsuits claim that more than 300,000 hospital workers face a pension shortfall of about $4 billion because hospitals have wrongly designated their pension plans as ‘church plans’ exempt from the Employee Retirement Income Security Act.” Expect to see no expense spared in the briefing at the high court.
 

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