Class-action lawsuit accuses Providence Health & Services of skirting federal pension law

Employees of Renton, Wash.-based nonprofit Providence Health and Services have filed a class-action lawsuit claiming the 34-hospital system has underfunded their pension plans, according to a Puget Sound Business Journal report.

Federal laws are in place to protect employee pension plans, however, churches are exempt from the laws and are able to operate without oversight from the federal government.

Although Providence does identify as a Catholic system, it does not identify itself as a "church, convention of churches or association of churches," which the employees claim is necessary for the church plan exemption under federal law.

The class-action lawsuit accuses Providence of using the exemption to underfund the employees' pension plans by up to $819 million, according to the report.

In a statement provided to the Business Journal, Providence said, "We have always been and remain committed to ensuring our retirees and beneficiaries receive the benefits they have earned. We believe we have complied with the law, including the applicable requirement for our retirement plans." Providence intends to defend its position in court, according to the report.

This is the second lawsuit concerning an exemption from federal pension oversight that has been filed in recent months. In October, nurses and other healthcare workers filed a class-action lawsuit against Daughters of Charity Health System – a six-hospital network based in Los Altos Hills, Calif. – claiming DCHS improperly classified its pension plan as a church plan, which resulted in underfunding.

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