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Dignity Health’s Church Plan Pension Deal Approved on Third Try

Oct. 20, 2021, 3:58 PM

A settlement that could put an extra $747 million in Dignity Health’s pension plan received approval from a California federal judge, who previously declined to greenlight the deal after noting problems with attorneys’ fees and conflicts among class members.

The revised settlement includes bigger payouts to about 3,200 former employees who won’t benefit from additional plan contributions and have an incentive to seek “generous immediate payments,” Judge Jon S. Tigar of the U.S. District Court for the Northern District of California said Tuesday. These increased payments were negotiated after members of this subgroup obtained separate counsel and filed a motion to intervene in the lawsuit, Tigar said.

The settlement, which is slated to benefit more than 91,000 people, requires the hospital to put at least $100 million in its pension plan in 2020 and 2021. Required contributions in the following three years will be based on recommendations from the plan’s actuaries, and could result in total contributions of about $747 million, according to the parties’ settlement papers.

This is the third time the parties have asked Tigar to sign off on the deal. He withheld approval in both 2019 and 2020, citing problems with how class counsel was slated to be paid and how the deal affected certain cashed-out plan participants.

Dignity Health is one of dozens of religiously affiliated hospitals that have been accused of wrongly treating their pension plans as “church plans” exempt from the Employee Retirement Income Security Act in order to underfund the plans by tens or hundreds of millions of dollars. The U.S. Supreme Court considered these cases in 2017, issuing a ruling that favored Dignity Health and other hospitals while leaving several questions open for further litigation.

The class is represented by Keller Rohrback LLP and Cohen Milstein Sellers & Toll PLLC. The intervenor subclass is represented by Izard, Kindall & Raabe LLP. Dignity Health is represented by Manatt, Phelps & Phillips LLP and Trucker Huss APC.

The case is Rollins v. Dignity Health, N.D. Cal., No. 4:13-cv-01450, order granting preliminary settlement approval 10/19/21.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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