Catholic Health East hit with lawsuit alleging underfunded pension plans

Two ex-employees of Catholic Health East filed a federal lawsuit last week claiming the nonprofit hospital chain's pension plans are underfunded by $438 million, the Philadelphia Inquirer reported.

Former employees Albert R. Chavies and Thomas Holland allege Catholic Health East wrongfully claims religious status for its defined-benefit pension "church" plans for the financial benefits, "not to adhere to a religious faith," the article noted. They argue that CHE should not qualify for church-plan status, and that its use of the status is unconstitutional. The Inquirer could not reach CHE for comment.

The Newton Square, Pa.-based health network, according to the suit, "wants to maintain and impose a religious status ... only on the retirement dollars of its employees."

The plaintiffs say in the suit that CHE, which employs 60,000 people in 11 states, is not controlled or funded by the Catholic Church, and employees aren't required to be Catholic, according to the Inquirer.

Courthouse News Service quotes the suit, which alleges CHE uses its Catholic status only when convenient or financially viable: "Although not in name, in actuality CHE deliberately chooses to distance itself from, or even abrogate, many religious convictions of the Catholic Church, when it is in its economic interest to do so, such as when it hires employees; partners in economic joint ventures; performs or authorizes medical procedures forbidden by the Catholic Church; invests in various business enterprises; and encourages divergent and contrary spiritual support to its clients."

Chavies, according to Courthouse News Service, seeks judgment that the pension plans are not church plans and an injunction ordering the hospital conglomerate to fully fund the plans and pay its civil penalties.

Meanwhile, in January, Catholic Healthcare West ended its board's association with the Catholic church, changing its name to Dignity Health in a governance restructure that will help the system expand nationally. However, its Catholic hospitals continue to follow religious healthcare directives.

To learn more:
- read the article from the Philadelphia Inquirer
- read the report from Courthouse News Service

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