HSHS chain and hospital workers near $62 million settlement in pension suit

The original lawsuit alleged that Hospital Sisters Health System, which operates St. Elizabeth's Hospital in O'Fallon, improperly used a religious exemption in federal pension laws to shortchange its employees on their pensions — in the amount of $514 million.

Now the employees’ attorneys have asked a judge to approve a settlement that would require HSHS to make $62.5 million in extra payments into the retirement plan from 2019 to 2022.

HSHS owns St. Elizabeth’s Hospital in O’Fallon, St. Joseph’s in Breese, St. Joseph's in Highland, Holy Family in Greenville, and St. Anthony’s in Effingham. Other Illinois hospitals managed by HSHS include St. John’s in Springfield, St. Francis in Litchfield and St. Mary’s in Decatur, as well as corporate headquarters located in Springfield.

The lawsuit alleged that HSHS underfunded the plans by claiming that it was a “church plan,” despite representing hospitals, not a church or convention of churches.

HSHS issued a statement Wednesday reiterating that the pension plan operates as a church plan because of its “Catholic health care mission,” and pointed out that it was one of more than 30 similar suits against Catholic health care entities.

“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 statement read. “The settlement will not change the philosophy of HSHS or the way it operates the plan.”

The lawsuit alleged that HSHS is not controlled by a church, receives no funding from a church, and no denominational requirement exists for employees. To apply the exemption to the hospital, the suit claimed, would be unconstitutional.

The lead plaintiff was Mary Holcomb, who worked at St. Elizabeth’s in Belleville from 1987 to 1994 and was a vested participant of the pension plan. The other lead plaintiff was Mary Grovogel, who worked for St. Vincent’s Hospital in Green Bay, Wisconsin, from 1977 to 2004. However, the case could potentially impact all 14,600 of HSHS’s employees and many more retirees.

Two cases were initially filed against HSHS, and were consolidated in 2016. Similar lawsuits have been filed against other hospital systems, and one of them went before the U.S. Supreme Court in 2017, which ruled that religious hospitals are eligible for the “church plan” exemption to federal laws. That overruled the HSHS workers’ arguments that the law was not meant to exempt hospital systems with tens of thousands of workers by later establishing ties to a church.

However, the U.S. Supreme Court ruling left some avenues open, which allowed some of the hospital pension suits to continue. According to Law360, the two sides in the HSHS suit reached an agreement to increase HSHS’s allotments to the pension plan over the next four years. HSHS would still be able to use the religious exemption to the federal laws, but would have to follow stricter rules on administration and notices to the 62,000 plan participants.

The attorneys for the workers filed a request on June 8, asking the federal court judge to approve their settlement. Attorneys for HSHS did not object to the settlement.

HSHS operates 15 hospitals in Illinois and Wisconsin.

This story was originally published June 13, 2018 at 2:25 PM with the headline "HSHS chain and hospital workers near $62 million settlement in pension suit."