Hospital ‘Church Plan’ Suit Going Forward

In his decision back in April, U.S. District Judge David L. Bunning declined to dismiss former members of St. Elizabeth Medical Center Employees’ Pension Plan Administrative Committee from an Employee Retirement Income Security Act breach-of-fiduciary-duty claim that the plan had not been properly funded.

On Friday, October 5, 2018, Judge Bunning once again rejected the former administrative committee members’ attempts to be dismissed from the case and denied their motion for reconsideration.

Arguing that the Judge’s April order was in conflict with Duncan v. Muzyn, a Sixth Circuit Court decision where it was found that the plaintiff in the case hadn’t alleged any “more than a hypothetical loss of expected benefits,” and based thereon, dismissed the plan management team from the claim.

In his decision on the motion for reconsideration, Judge Bunning declined to reconsider based on Duncan until “a determination has been made regarding ERISA’s application to the plan.” Accordingly, the court found the motion to be premature and denied on that basis.

In April, Judge Bunning had previously found that the members of the plan sufficiently alleged that former members of its administration committee could be liable as fiduciaries for losses to the plan if the court ruled the plan didn’t qualify for an ERISA religious exemption, as claimed by the medical center.

In addition to the “church plan” claim of exemption, the underfunding claim of plaintiffs’ also survived. The former members had argued that if the ERISA underfunding claim fails as they allege, the linked “church plan” claim must also be dismissed.

The plaintiffs are represented in part by Erik D. Peterson of Mehr Fairbanks Trial Lawyers PLLC in Lexington, KY.

The case is Boden et al. v. St. Elizabeth Medical Center Inc. et al., case number 2:16-cv-00049, in the U.S. District Court for the Eastern District of Kentucky.