Chicago hospital accused of illegally transferring pension obligations to an order of nuns

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A group of former employees have accused Holy Cross Hospital in Chicago of improperly classifying its pension as a "church plan" exempt from federal law, according to Bloomberg BNA.

The 12-count complaint alleges that Holy Cross retroactively claimed church plan status in 1993. The plan was then exempt from the Employee Retirement Income Security Act, which requires pension plans to have adequate funding to pay their promised benefits.

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.

Holy Cross is one of many healthcare organizations across the nation accused of misclassifying pension plans as church plans. According to Bloomberg BNA, 30 similar lawsuits have been brought against religiously affiliated healthcare companies over the past three years. In May, Hartford, Conn.-based St. Francis Hospital, part of Livonia, Mich.-based Trinity Health, agreed to pay $107 million to settle a lawsuit alleging it mismanaged its pension plan by classifying it as a church plan.

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