First Preliminary Settlement Reached In ERISA "Church Plan" Case

A series of cases filed around the country has challenged the treatment of Catholic hospital system pension plans as "church plans" exempt from ERISA. In Overall v. Ascension, a Michigan federal district court ruled in favor of the hospitals finding that the plans did not need to have been "established by" a church.  It is enough they were created by a church-affiliated organization. (See prior posting.)  Plaintiffs appealed the decision, and the U.S. 6th Circuit Court of Appeals appointed a mediator to try to settle the case. BenefitsPro reported yesterday that now, after 6 months of negotiations, the parties have agreed to a settlement that will give Ascension plan participants "ERISA-like" protections for the next seven and one-half years, but the plans will retain their "church plan" status. Plaintiffs in the case claimed that Ascension's plans were underfunded by $440 million.  The preliminary settlement would require Ascension to contribute an additional $8 million in funding. The proposed settlement still requires court approval.