St. Joseph’s Hospital and Medical Center Settlement
Welcome to the Garbaccio v. St. Joseph’s Hospital and Medical Center Settlement website. This website is intended to keep Class members informed regarding the Class Action Settlement. While the District Court has approved the Notice of Proposed Settlement (the “Class Notice”) and ordered that certain documents filed with the Court be posted on this website, the content of this website is the responsibility of Plaintiffs’ Counsel and has not been approved by the Court.
On March 6, 2018, the Court granted final approval to the Settlement.
The case involved the St. Joseph’s Hospital and Medical Center Plan, a noncontributory defined benefit pension plan (referred to as “the St. Joseph’s Plan” or “the Plan”).
The lawsuit alleged that St. Joseph’s denied the Plan’s participants and beneficiaries the protections of the Employee Retirement Income Security Act (“ERISA”) by improperly claiming that the Plan is a “church plan” exempt from ERISA. The lawsuit further alleged that St. Joseph’s, as the Plan sponsor, violated ERISA in a variety of ways, and, alternatively, that application of the church plan exemption to the St. Joseph’s Plan violates the Establishment Clause of the Constitution.
The initial St. Joseph’s case was filed in federal district court in New Jersey on May 13, 2016 (Case No. 2:16-cv-2740-JMV-JBC), against St. Joseph’s, members of various committees, and additional individuals who would be discovered to have fiduciary responsibilities with respect to the St. Joseph’s Plan (collectively, “Defendants”). Subsequently, a similar additional complaint was filed that also alleged that St. Joseph’s was improperly operating the Plan as a church plan in violation of ERISA. See Barker v. St. Joseph’s Healthcare System, Inc., 2:16-cv-02748-JLL-JAD (D.N.J.) On July 12, 2016, the Court consolidated the related cases and on March 29, 2017, Cohen Milstein and Keller Rohrback were appointed interim co-lead counsel.
On May 8, 2017, the Court stayed the case in order to permit the parties to engage in mediation and on June 8, 2017, the parties reached a compromise and filed a Joint Notice of Settlement. Judge Vazquez granted final approval of the Settlement on March 6, 2018.
The Settlement Class
The Settlement was approved on behalf of the following Class:
All present and former participants (vested or nonvested) or beneficiaries of the Plan as of the
Effective Date of Settlement.
The Settlement resolves all claims against Defendants and applies to all past and present, vested and non-vested, participants in the Plan and their beneficiaries.
Benefits to the Settlement Class
The Settlement provides a cash contribution of $42.5 million (forty-two million, five hundred thousand dollars) to the Plan, as well as a corporate guarantee of accrued benefits under the Plan for a period of seven years, to settle the claims against Defendants. Defendants already have contributed $45 million to the Plan, fully satisfying the Settlement’s Plan contribution requirement, as well as voluntarily providing an additional contribution of $2.5 million. Because the Plan is a defined benefit pension plan and not a defined contribution plan with individual accounts, like a 403(b) plan or a 401(k) plan, the cash amount has been contributed to the Plan as a whole, rather than to individual Plan participants and beneficiaries. Your pension benefit will not increase as a result of the Settlement. Additionally, the Settlement provides significant non-monetary equitable consideration, in that current participants in the Plan will receive certain ERISA-like financial and administrative protections for the next seven years. The Effective Date of the Settlement is sixty (60) days after the Court enters its Final Order approving the Settlement and the time to appeal has expired.
Released Claims and Fairness Hearing
The Class Representatives and their attorneys believe that this Settlement is in the best interests of the Class members. As a result of the Settlement, the Class releases certain claims against Defendants pertaining to the Church Plan exemption. (These claims are defined in the Settlement Agreement).
The Court held a Fairness Hearing on March 6, 2018 at 11:00 a.m., at the U.S. District Court for the District of New Jersey and considered the fairness of the proposed Settlement. The Court heard any objections and arguments concerning the proposed Settlement’s fairness at that time. No benefits can be issued to Class members until after the settlement is Final.
Q: How do I know whether I am part of the Settlement Class?
The Court has certified this case as a class action for settlement purposes only. You are a member of the Settlement Class if you are or were, on or before the date this Settlement becomes effective, a vested or non-vested participant in or beneficiary of the St. Joseph’s Healthcare System Pension Plan.
Q: How will the Settlement be distributed?
Because the Plan is a defined benefit pension plan, the $42.5 million has been contributed to the Plan as a whole, rather than distributed to individual Plan participants and beneficiaries. Your pension benefit will not increase as a result of the Settlement. The Settlement also provides significant non-monetary equitable consideration, in that current participants in the Plan will receive certain ERISA-like financial and administrative protections for the next seven years. You will remain entitled to the benefit you have accrued pursuant to the Plan’s terms.
Members of the Settlement Class do not need to do anything in order to obtain the benefits and protections provided by the Settlement in this case. Defendants were obligated to contribute an aggregate amount of $42.5 million to the Plan by no later than September 20, 2017. As of July 31, 2017, Defendants have contributed $45 million to the Plan, in satisfaction of their obligation under the Settlement terms. Additionally, at their sole discretion, Defendants may make additional contributions to the Plan at any time.
Q: What does the Settlement provide?
Under the proposed Settlement, Defendants agreed to contribute $42.5 million to the Plan and have already contributed $45 million, in full satisfaction of this settlement obligation. The Settlement therefore will improve the retirement security of all Plan participants and beneficiaries.
In addition, St. Joseph’s has agreed to provide other significant protections for the Plan that will remain in place for a period of seven years after the Settlement Agreement becomes final. First, if the assets in the Plan’s trust are ever insufficient to pay accrued benefits, St. Joseph’s guarantees that it will make sufficient contributions to the Plan trust to ensure all accrued benefits are paid. Second, any amendment or termination of the Plan cannot reduce participants’ accrued benefits. Third, if the Plan is merged with or into another plan in that time period, participants will be entitled to the same or greater benefits than they were before the merger.
The Settlement also includes equitable provisions which mimic certain provisions of ERISA concerning plan administration, summary plan descriptions, notices (annual summaries, pension benefits statements, current benefit values), and the Plan’s claim review procedure. These provisions also are in place for the next seven years.
The above description of the operation of the Settlement is only a summary. The governing provisions are set forth in the Settlement Agreement.
Q: What if I do nothing?
If you do nothing and you are a Class member, you will participate in the Settlement as described above in this Notice if the Settlement is approved.
Q: Can I exclude myself from the Settlement?
You do not have the right to exclude yourself from the Settlement. For settlement purposes, the Class 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 case for all claims that were or could have been asserted in the case against the Defendants or are otherwise included in the release under the Settlement.
Q: How will the lawyers be paid?
At the March 6, 2018 Fairness Hearing, the Court awarded Class Counsel attorneys’ fees pursuant to Federal Rule of Civil Procedure 23(h) in the amount of $2,425,863.95 and $34,136.05 in reimbursement of Class Counsel’s reasonable expenses incurred in prosecuting the Action. Named Plaintiffs were each awarded Incentive Awards in the amount of $10,000.
These amounts were paid entirely by Defendants. See Section 7.1.3 of the Settlement Agreement. The attorneys’ fees are separate from the $45 million contribution made already to the Plan. In other words, any payment of attorneys’ fees, expenses, and incentive awards to Named Plaintiffs did not reduce the contribution already paid to the Plan.
If you are a Settlement Class member and you have questions regarding the Settlement, please contact Class Counsel at (800) 290-3132 or via .
Please do not contact the Court. Its personnel will not be able to answer your questions.
- Complaint – 05/13/2016
- Settlement Agreement – 07/20/2017
- Notice of Proposed Settlement – 11/03/2017
- Plaintiffs’ Motion & Memo for Final Approval of Settlement – 01/19/2018
- Plaintiffs’ Unopposed Motion for Attorneys’ Fees & Expenses & Incentive Awards to Named Plaintiffs – 01/19/2018
- Order and Final Judgment – 03/06/2018