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Class Claims Hospital Chain Shorts Pensions

PHILADELPHIA (CN) - Health-care workers claim in a class action that Catholic Health East underfunded 60,000 workers' pension plans by $438 million, using a bogus claim that they are "exempt from ERISA's protections because they are 'Church plans.'"

Lead plaintiff Albert R. Chavies sued Catholic Health East, Anthony Camaratto and Clayton Fitzhugh, in Federal Court.

Chavies claims that Catholic Health East is not owned, operated, or funded by the Catholic Church.

He says in the complaint that "none of the CHE [pension] plans meet the definition of a church plan because CHE plainly is not a church or convention or association of churches and because none of the CHE plans was established by a church or convention or association of churches."

Catholic Health East, a nonprofit, "is not controlled by the Catholic Church and, despite its name, is not 'associated with' the Catholic Church within the meaning of ERISA because it does not share common religious bonds and convictions with the Catholic Church," the complaint states.

"A sampling of facts reveals CHE as a nonprofit hospital conglomerate, not unlike other nonprofit hospitals. It is not owned or operated by the Catholic Church and does not receive funding from the Catholic Church. It is long since removed from the days when nuns once ran the hospitals, spread their gospel, and faithfully stewarded retirement assets for their employees. Moreover, 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.

"With respect to recruiting and hiring its employees - those who then become the CHE retirement plan participants - CHE is regularly asked whether a prospective employee should be Catholic, a question which CHE unequivocally answers in the negative. ...

"With respect to medical procedures, CHE hospitals encourage patients to discuss their religious and ethical choices with doctors on their staff, some of whom perform abortions and vasectomies, dispense contraceptives and perform in vitro fertilization in their separate medical practices - all forbidden by the Catholic Church."

CHE chooses to align itself with the Catholic Church only when it comes to its employees' pension plans, according to the complaint. CHE "wants to maintain and impose a religious status not on its employees, or in any of the areas detailed above ... only on the retirement dollars of its employees. CHE imposes religion on those retirement dollars because in so doing, according to CHE, it may underfund the CHE plans by over $438 million and be excused from the necessary protections that ERISA provides."

Catholic Health East claims on its Internet home page, checked this morning, that its system "includes 35 acute care hospitals, four long-term acute care hospitals, 26 freestanding and hospital-based long-term care facilities, 12 assisted-living facilities, four continuing care retirement communities, eight behavioral health and rehabilitation facilities, 31 home health/hospice agencies and numerous ambulatory and community-based health services. Catholic Health East facilities employ more than 60,000 full-time employees as partners in ministry."

Chavies seeks declaratory judgment that the pension plans are not "church plans," as defined by ERISA, and an injunction ordering the conglomerate to fully fund the plans and pay civil penalties.

He is represented by Casey Preston, with Cohen, Milstein, Sellers and Toll.

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