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 February 22, 2019, the Honorable Sue E. Myerscough granted final approval of the Settlement.
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.
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 February 22, 2019, final 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.
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.
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.
Q: What rights am I giving up in the Settlement?
This Order and Final Judgment fully, finally, and forever releases, relinquishes, and discharges 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: 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 by the Court to represent Named Plaintiffs and the Settlement Class.
Q: How will the lawyers be paid?
Class Counsel applied for an award of attorneys’ fees and expenses, and Incentive Awards for the Named Plaintiffs. The Court approved that motion at the Fairness Hearing on February 22, 2019.
- Master Consolidated Complaint – 08/15/2017
- Settlement Agreement – 05/31/2018
- Class Notice
- Motion and Memorandum in Support of Plaintiffs’ Unopposed Motion for Final Approval of Settlement Agreement – 01/07/2019
- Motion and Memorandum in Support of Plaintiffs’ Unopposed Motion for Attorneys’ Fees, Expenses and Incentive Awards – 01/07/2019
- Reply in Support of Unopposed Motion for Final Approval of Settlement Agreement and Unopposed Motion for Award of Attorneys’ Fees, Expenses and Incentive Awards – 02/15/2019
- Order and Final Judgment – 02/22/2019