A class-action lawsuit has been filed against Daughters of Charity Health System — a six-hospital network based in Los Altos Hills, Calif. —by nurses and other healthcare workers who are concerned about their pensions.
The lawsuit alleges DCHS evaded federal pension law by improperly classifying its pension plan as a "church plan." Due to the misclassification, the system's pension plan is exempt from the Employee Retirement Income Security Act of 1974, which requires pension plans to have adequate funding to pay their promised benefits. According to the lawsuit, DCHS does not qualify for this exemption, as it is only available to actual churches.
In their lawsuit, the plaintiffs further allege the pension plan has been underfunded due to the exemption.
Earlier this month, DCHS agreed to sell its six hospitals to Ontario, Calif.-based for-profit hospital operator Prime Healthcare Services, and, according to the lawsuit, Prime has not committed to operate the pension plan as an ERISA-protected plan nor to address the pension's funding shortfall.
The lawsuit is backed by the SEIU-United Healthcare Workers West, a healthcare union with more than 150,000 members. "Daughters of Charity's decision to sell to Prime puts the future of nearly 9,000 employees and retirees at grave risk," said Dave Regan, president of SEIU-UHW.
The lawsuit appears to be an attempt by SEIU-UHW to delay or stop the sale of the DCHS hospitals to Prime, since immediately after DCHS announced the sale, the union proclaimed thousands of employees of the hospitals would fight to stop the sale.
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