Illinois health system nears $62.5M pension settlement

Former employees of Hospital Sisters Health System, a 15-hospital system based in Springfield, Ill., have asked a judge to approve a $62.5 million settlement in a lawsuit alleging the health system underfunded its pension plan, according to the Belleville News-Democrat.

In two lawsuits that were consolidated in 2016, former HSHS employees alleged the health system improperly classified its pension as a "church plan" exempt from the federal Employee Retirement Income Security Act, which requires pension plans to have adequate funding to pay their promised benefits.

Although the parties are close to reaching a settlement in the case, HSHS reiterated this week that its pension plan operates as a church plan because of the system's "Catholic healthcare mission," according to the report.

"Be assured that our plan is well-funded, has paid all benefits due under the plan and has sufficient assets for the future to pay benefits as they become payable to our HSHS retirees," the system said in a statement to the Belleville News-Democrat. "The settlement will not change the philosophy of HSHS or the way it operates the plan."

The HSHS lawsuit is one of many cases filed over the way religiously affiliated hospitals fund their pension plans. In October 2016, Renton, Wash.-based Providence Health & Services agreed to pay nearly $352 million to resolve claims it misclassified its pension plan. St. Francis Hospital in Hartford, Conn.; Livonia, Mich.-based Trinity Health; and St. Louis-based Ascension have settled similar suits in recent years.

In June 2017, the U.S. Supreme Court held that church-affiliated hospitals are eligible for ERISA's "church plan" exemption. Under the settlement in the HSHS case, the health system would still be able to use the exemption to ERISA, but would have to follow stricter rules on administration and notices to the pension plan participants. The settlement also requires HSHS to contribute $62.5 million in extra payments into the plan between 2019 and 2022, according to the report.

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