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Hospital Sisters Health System Settlement

Welcome to the Holcomb v. Hospital Sisters Health System Settlement website. This website is intended to keep Settlement Class members informed regarding the Class Action Settlement. The content of this website is the responsibility of Class Counsel and has not been approved by the Court.

On October 30, 2018, the Honorable Sue E. Myerscough granted preliminary approval of the Settlement.

Background

On September 26, 2016, Plaintiff Mollet filed a putative class action complaint in the Northern District of Illinois against HSHS and other Defendants on behalf of the participants and beneficiaries of the Hospital Sisters Health System Employees Pension Plan (the “Plan”).  Plaintiff Mollett alleged various violations of ERISA. On October 11, 2016, Plaintiffs Mary Holcomb and Mary Grovogel filed a separate putative class action in this Court against HSHS and other Defendants, alleging violations of ERISA. Plaintiff Mollet and Defendants then requested transfer of the Mollet matter to the Court in the Central District of Illinois. The transfer motion was granted on October 31, 2016, and the cases were consolidated. Keller Rohrback L.L.P. and Cohen Milstein Sellers & Toll PLLC (collectively, “Class Counsel”) were appointed by the Court as Interim Co-Lead Counsel and Matthew H. Armstrong was appointed as Interim Liaison Counsel.

Plaintiffs filed a Complaint on February 16, 2017, and the Court then ordered that the case be stayed while the United States Supreme Court considered an appeal in three other cases involving church plans, Advocate Health Care Network v. Stapleton, No. 16-74. That appeal addressed whether, as Plaintiffs alleged here, a church plan must be established by a church in order to qualify as an ERISA-exempt church plan. The Supreme Court held argument in that case on March 27, 2017, and issued its decision on June 5, 2017, holding that pension plans (such as those established by HSHS) need not be established by churches in order to qualify as ERISA-exempt church plans so long as other conditions necessary for church plan status are satisfied. While Plaintiffs advance other strong arguments and theories not decided by the Supreme Court’s opinion, arguably, Plaintiffs’ case was negatively impacted by that decision. Additionally, HSHS made substantial contributions to the Plan’s trust before this case was filed and while this case has been pending and the investment environment has been highly favorable, which has improved the Plan’s funding.

Following the Supreme Court’s decision, the Parties resumed active litigation. Plaintiffs filed their Amended Master Consolidated Complaint (“Complaint”) on August 15, 2017. The Complaint alleges that Defendants denied ERISA protections to the participants and beneficiaries of the Plan, a defined benefit pension plan sponsored by HSHS, by incorrectly claiming that the Plan qualifies as an ERISA-exempt “church plan.” The Complaint further alleges that asserting this exemption caused Defendants to deny Plan Participants the protections of ERISA. These included, among other violations: underfunding the Plan by over $514 million; offering eligible participants lump sum distribution values that are less than what they should have been if the lump sums had been calculated in accordance with ERISA; and failing to furnish Plaintiffs or any member of the class with required statements and reports. The Complaint also alleged that the church plan exemption, as applied to HSHS, violated the Establishment Clause of the First Amendment, and lodged alternative claims for breach of contract, promissory estoppel, unjust enrichment, and breach of fiduciary duty pursuant to state law.

However, Defendants claim that their actions have been lawful and proper at all times.  Defendants believe that the Plan was established and maintained properly as a church plan exempt from ERISA and that the Plan was funded adequately.  Both before and after the suit was filed, Defendants believe that annual contributions to the Plan were substantial.

Defendants filed their Motions to Dismiss on October 16, 2017. Plaintiffs filed their Opposition to the Motions to Dismiss on December 15, 2017, and Defendants filed their Reply Brief on January 12, 2018. The Parties then filed a Joint Stipulation, stipulating to additional briefing by the Parties to address Medina v. Catholic Health Initiatives, 877 F. 3d 1213 (10th Cir. 2017), another church plan case. On February 2, 2018, prior to completion of that briefing however, the Parties filed a Joint Motion to stay all proceedings so that the Parties could schedule a mediation.

The Parties engaged in settlement discussions in April 2018. The Settlement is the product of extensive, arm’s-length negotiations between Class Counsel and Defendants’ Counsel, with the assistance of an experienced third-party mediator.

The Settlement Class

On October 30, 2018, preliminary approval of the Settlement was granted on behalf of the following Settlement Class:

As of May 31, 2018, all present and former participants (vested or non-vested) or beneficiaries of the Plan.

Settlement FAQs

Q: What does the Settlement provide?

The Settlement provides for annual cash contributions to the Plan of a minimum of $15.625 million per year (the “Annual Payment”), for Fiscal Years 2019 through 2022, for a total of $62.5 million. The cash amount will be contributed to the Plan, not to individual Plan participants and beneficiaries. Your pension benefit will not increase or be recalculated as a result of the Settlement. You will not receive any individual cash benefit recovery.

Additionally, the Settlement provides significant non-monetary considerations, in that current participants in the Plan will receive certain financial and administrative protections comparable to ERISA through Fiscal Year 2022, or until such time after April 4, 2018 as the $62.5 million is contributed to the Plan. During that time period, Defendants will guarantee that the Plan will have sufficient funds to pay the accrued benefits payable to participants under the terms of the Plan. Defendants have made similar financial commitments with respect to the Plan should there be a plan termination or merger. In addition, Defendants have agreed that during this same time period, no amendment to the Plan shall decrease the accrued benefit of any participant in the Plan. Commencing 180 days after the Effective Date of the Settlement, the Plan Administrator will also put in place certain arrangements concerning Plan administration, notices to participants, and procedures for claim review. These payments, and the non-monetary terms of the Settlement, benefit the current participants in and beneficiaries of the Plan, including retirees. For more details see Sections 7 and 8 of the Settlement Agreement.

Defendants have also agreed to pay up to $850,000 to be used to fund Class Counsel’s requested attorneys’ fees, out of pocket expenses, and Incentive Awards to the Named Plaintiffs. The District Court has the sole discretion as to whether to award attorneys’ fees, reimbursement of expenses, or Incentive Awards to the Named Plaintiffs, and, if so, in what amounts up to $850,000. Class Counsel has requested that the Court award $5,000 each to Mary Holcomb, Mary Grovogel, Holly Mollet, Rhonda Rosenthal, and Donald Schneider, as Incentive Awards to be deducted from the attorneys’ fees award. See Settlement Agreement §§ 7.1.2, 7.1.4.

Q: What rights am I giving up in the Settlement?

If the Settlement is approved, the Court will enter a judgment. This judgment will fully, finally, and forever release, relinquish, and discharge any and all actual or potential claims, actions, causes of action, demands, obligations, liabilities, attorneys’ fees, expenses and costs under federal or state laws arising out of the allegations of the Complaint that were brought or could have been brought as of the date of the Settlement Agreement, including any current or prospective challenge to the “church plan” status of the Plan, whether or not such claims are accrued, whether already acquired or subsequently acquired, whether known or unknown, in law or equity, brought by way of demand, complaint, cross-claim, counterclaim, third-party claim, or otherwise.

For members of the Settlement Class only, Released Claims are not intended to include the release of any of the following: (a) Any rights or duties arising out of the Settlement Agreement, including the express warranties and covenants in the Settlement Agreement; (b) Individual claims for benefits brought under state law pursuant to the Plan’s documents that do not arise out of the allegations of the Complaint; (c) Claims related to any other plan that is merged, adopted or consolidated into the Plan after the Effective Date of Settlement; or (d) Any claim arising under ERISA with respect to any event occurring after the Internal Revenue Service issues a written ruling that the Plan does not qualify as a church plan; the Plan sponsor elects to be governed by ERISA; a court of law issues a definitive and final ruling that the Plan is not a church plan; the Roman Catholic Church disassociates itself from the Plan’s Sponsor; or an amendment to ERISA is enacted and becomes effective as a law of the United States eliminating the church plan exemption.

Q: How do I know whether I am part of the Settlement?

The Court has certified the HSHS case as a class action for settlement purposes only. You are a member of the Settlement Class if as of May 31, 2018 you were a present or former participant (vested or non-vested) or beneficiary of the Hospital Sisters Health System Employees Pension Plan.

Q: Can I exclude myself from the Settlement?

You do not have the right to exclude yourself from the Settlement. For settlement purposes, the Action was certified under Federal Rule of Civil Procedure 23(b)(1) and/or 23(b)(2) (non-opt-out class) because the Court determined the requirements of that rule were satisfied. Thus, it is not possible for any of the members of the Settlement Class to exclude themselves from the Settlement. As a member of the Settlement Class, you will be bound by any judgments or orders that are entered in the Action for all claims that were or could have been asserted in the Action against Defendants or are otherwise included in the release under the Settlement. The Court resolves the issues for all Settlement Class members.

Although members of the Settlement Class cannot opt-out of the Settlement, they can object to the Settlement and ask the Court not to approve the Settlement.

Q: Do I have a lawyer in the case?

The law firms of Keller Rohrback L.L.P. and Cohen Milstein Sellers & Toll PLLC (collectively, “Class Counsel”) have been appointed as Interim Co-Lead Counsel by the Court to represent Named Plaintiffs and the Settlement Class. You will not be charged directly by these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.

Q: How will the lawyers be paid?

Prior to the Fairness Hearing, Class Counsel will apply for an award of attorneys’ fees and expenses, and Incentive Awards for the Named Plaintiffs. The total amount that Class Counsel will seek for fees, expenses, and Incentive Awards will not exceed $850,000. This amount will be paid entirely by Defendants. Any payment of attorneys’ fees, expenses, and Incentive Awards to Named Plaintiffs will not reduce the amount to be paid to the Plan under the Settlement.

To date, Class Counsel has not received any payment for their services in prosecuting this Action on behalf of the Settlement Class, nor have Class Counsel been reimbursed for their out-of-pocket expenses. The Court will determine the actual amount of the award.

Q: How do I tell the Court if I don’t like the Settlement?

Any member of the Settlement Class who wishes to object to the fairness, reasonableness, or adequacy of the Settlement, to any term of the Settlement Agreement, to the application for payment of attorneys’ fees and expenses, or to the application for Incentive Awards for the Named Plaintiffs, may file an Objection in writing.

All written objections and supporting papers must: (1) clearly identify the case name and number “Holcomb v. Hospital Sisters Health System, No. 16-cv-03282;” (2) be filed with the Court and either postmarked and mailed or faxed to Class Counsel and Defendants’ Counsel at the addresses below on or before January 25, 2019, twenty-eight (28) days before the Fairness Hearing; (3) set forth your full name, current address, and telephone number; (4) set forth a statement of the position you wish to assert, including the factual and legal grounds for the position; (5) set forth the names and a summary of testimony of any witnesses that you might want to call in connection with the objection; (6) provide copies of all documents that you wish to submit in support of your position; (7) provide the name(s), address(es) and phone number(s) of any attorney(s) representing you; and (8) include your signature.

Your written objection must be filed with the Court, and mailed or faxed to the counsel listed below by no later than January 25, 2019:

File with the Clerk of the Court:

Clerk of the Court
United States District Court
Central District of Illinois
600 East Monroe Street
Springfield, IL 62701
Re: Holcomb v. Hospital Sisters Health Systems, No. 16-cv-03282

And, by the same date, serve copies of all papers by mail or fax to each of the following:

CLASS COUNSEL:

Lynn Lincoln Sarko
Laura R. Gerber
KELLER ROHRBACK L.L.P.
1201 Third Ave., Suite 3200
Seattle, WA 98101
Fax: (206) 623-3384

Ron Kilgard
KELLER ROHRBACK L.L.P.
3101 North Central Ave., Suite 1400
Phoenix, AZ 85012
Fax: (602) 248-2822

Karen L. Handorf
Michelle C. Yau
COHEN MILSTEIN SELLERS & TOLL PLLC
1100 New York Ave., N.W., Suite 500 West
Washington, D.C. 20005
Fax: (202) 408-4699

DEFENDANTS’ COUNSEL:

Howard Shapiro
Stacey C.S. Cerrone
PROSKAUER ROSE, LLP
650 Poydras St., Suite 1800
New Orleans, LA 70130
Fax: (504) 310-2022

UNLESS OTHERWISE ORDERED BY THE COURT, ANY MEMBER OF THE SETTLEMENT CLASS WHO DOES NOT OBJECT IN THE MANNER DESCRIBED HEREIN MAY BE DEEMED TO HAVE WAIVED ANY OBJECTION AND MAY BE FOREVER FORECLOSED FROM MAKING ANY OBJECTION TO THE PROPOSED SETTLEMENT AND THE APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES AND INCENTIVE AWARDS TO THE NAMED PLAINTIFFS.

Q: When and where will the Court decide whether to approve the Settlement?

The Court will hold a Fairness Hearing on Friday, February 22, 2019, at 1:30 p.m. C.S.T., at the United States District Court for the United States District Court, Central District of Illinois, 600 E. Monroe St., Springfield, IL 62701.

IF YOU DO NOT WISH TO OBJECT TO THE PROPOSED SETTLEMENT OR THE APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES AND INCENTIVE AWARDS TO THE NAMED PLAINTIFFS, YOU NEED NOT ATTEND THE HEARING.

At the Fairness Hearing, the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. After the Fairness Hearing, the Court will decide whether to approve or reject the Settlement. The Court will also rule on the motions for attorneys’ fees and expenses and Incentive Awards to the Named Plaintiffs. We do not know how long these decisions will take.

Q: Do I have to come to the Fairness Hearing?

Class Counsel will answer questions Judge Myerscough may have. You are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, your objection will be before the Court when the Court considers whether to approve the Settlement as fair, reasonable and adequate. You may also have your own lawyer attend the Fairness Hearing at your expense, but such attendance is not necessary.

Q: May I speak at the Fairness Hearing?

If you are a member of the Settlement Class and you have filed a timely objection, you may ask the Court for permission to speak at the Fairness Hearing. To do so, you must send a letter or other paper called a “Notice of Intention to Appear at Fairness Hearing in Holcomb v. Hospital Sisters Health System, No. 16-cv-03282.” Be sure to include your name, address, telephone number, and your signature. Your Notice of Intention to Appear must be filed with the Clerk of the Court and postmarked no later than January 25, 2019.

The Fairness Hearing may be delayed by the Court without further notice to the Settlement Class. If you wish to attend the Fairness Hearing, you should confirm the date and time with Class Counsel.

Q: What happens if I do nothing at all?

If you do nothing and you are part of the Settlement Class, you will participate in the Settlement as described above in this Class Notice. If the Settlement is approved, you will be bound by the terms of the Settlement.

Contact

If you are a Settlement Class member and you have questions regarding the Settlement, please contact Class Counsel at (888) 684-7817 or via .

Please do not contact the Court. Its personnel will not be able to answer your questions.