Click here for a short summary of the issue. Click here for a detailed timeline.
See also the Pension Rights Center website.
Click here for ex-St. Peter's CEO John Matuska's 2011 letter to the IRS.
Click here for ex-St. Peter's VP of HR Bruce Pardo's 2011 letter to the IRS.
Haga clic aqui para verun resumen del problema en español.

Friday, March 14, 2014

Big Victory in Related Case; SPUH Lawsuit Update

We only just found out (sorry!) but we have a bombshell development to share, along with an update on the Saint Peter's class action suit.

Last December 12, the U.S. District Court judge in the case of Rollins v. Dignity Health ruled that the hospital system in that case was not entitled to "church plan" status. This is one of the five ongoing class action lawsuits (including Kaplan v. Saint Peter's Healthcare System) challenging Catholic hospital systems that have declared "church plan" exemptions for their pension plans. The law firms on the plaintiff's side are the same ones representing Larry Kaplan and the Saint Peter's plan membership, and the arguments they put forward are very similar (in all five cases, in fact), so this is a very heartening development indeed.

Thomas E. Clark, Jr. at the FRA PlanTools blog wrote a summary of the ruling that we really can't improve upon. We urge everyone to read it in its entirety, as well as the ruling itself.

In denying Dignity Health's motion to dismiss the case, Judge Henderson agreed with the plaintiffs' arguments in several important respects. According to his reading of the ERISA statute, only a church or association of churches can establish a church plan. (The subsection of the statute about church associated organizations [e.g., hospitals] allows them to maintain a church plan established by a church, but not to establish a church plan. Interpreting the statute to allow church associated organizations to establish such a plan would make superfluous the previous section of the statute, actively retained by Congress when they amended the statute, thus that interpretation is incorrect.) The ruling rejected the IRS's 30-year history of awarding church plan status to associated organizations as erroneous and lacking the force of law. It also argued that numerous prior court decisions granting church plan status to associated organizations were wrong, giving clear reasons why they were wrong.

Clark calls the decision "a resounding victory for the plaintiffs" -- though the ruling does not end the case (it was a rejection of Dignity's Motion to Dismiss), it rules that Dignity now stands in violation of ERISA. He concludes, "Although this decision does not directly apply to any plan but the one sponsored by Dignity Health, this could change everything if it becomes the law of the land, rather than just the law of this case."

Well, that's what we're hoping for. In the Saint Peter's case, oral argument on Saint Peter's Motion to Dismiss is scheduled for March 24. Karen Handorf of Cohen Milstein will argue on behalf of Larry and his fellow plan members, and the recent ruling in the Dignity Health case will be foremost in the minds of those in attendance. We will post further news when we get it (hopefully much more swiftly next time).


  1. I just really wish the communication between kaplan and the others was "allowed" or so to speak condoned--and the lawyers would stop playing games with "share information with me" "send me what you have" This is non-sense! It would be to everyones benefit to step up to the plate! And do not under-estimate Saint Peter's for a second.

  2. Not sure which "others" you mean, but Larry has cut himself off for very good reason. Communication between Larry and his lawyers is privileged; communication between Larry and, say, you or me is subject to legal discovery. He could be forced to reveal it to the hospital's lawyers, and it could be used against him -- meaning us -- in court.

  3. Lets not have a play on words here! "others" is Any other additional people. So when does this case become public? So I can review it and see if any information that I have would be beneficial?

    1. Filings by the litigants (including motions, declarations, exhibits etc.) and rulings by the judge are public. We have published those materials here, and will continue to do so as the case progresses and more become available. Other materials such as legal strategy are protected and will only be made public at the discretion of the litigants if at all. (To be clear, we have access only to public information.)

  4. This is an important development for retirees in the Saint Peter's Church Plan. Despite assurances by management that the Board was committed to fully funding the plan over the next 10 years, this is another broken promise. As of 12/31/2013, the plan was underfunded by $56 million and the hospital only funded the plan by $3 million.Using accounting gimmicks, the hospital reduced the pension liability by $40 million in 2013. That means that the real unfunded liability is $96 million.In essence there is no intention to fully fund the plan over a 10 year period. This plan is in real trouble and we need the courts to protect the interests of the retirees.We certainly can't depend on the Catholic Church and IRS to do that.

  5. How do you know this??

  6. Not sure where the above user got the data from. I couldn't find 2013 data posted yet, but 2012 is. For those seeking info about the unfunded pension liability it is available on the IRS Form 990 to view at (It starts on page 111) (P.S. Don't look at page 50 unless you need to raise your blood pressure)


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