A pair of former employees have brought a federal class action
suit against Wheaton Franciscan Healthcare and Ascension Health hospital
chains, accusing the companies of mishandling the employee pension plan and
skirting federal pension safeguards by claiming an undeserved religious
Bruce Bowen and Cheryl Mueller filed a putative class-action
suit June 28 in U.S. District Court for Northern Illinois in Chicago against
Wheaton Franciscan, which has corporate offices in west suburban Wheaton and in
Glendale, Wis., and against St. Louis-based Ascension Health.
Wheaton Franciscan has run hospitals and other facilities
since 1983 in Illinois, Wisconsin, Iowa and Colorado, employing more than
17,000 people. On March 1, 2016, Ascension took over Wheaton Franciscan
facilities in southeast Wisconsin, assuming control of the pension plan for
those employees. Ascension runs about 2,500 medical facilities, including 142
hospitals, employing about 160,000 people, according to the lawsuit.
Bowen worked for Wheaton Franciscan from 1998 to 2014, while
Mueller worked for the company from 1968 to 2015, the suit said. Both are
vested in the retirement plan maintained by defendants.
Plaintiffs’ 106-page suit alleged violations of the U.S.
Employee Retirement Income Security Act of 1974, as well as a violation of
The 1974 Act requires pension plan administrators comply with
a number of provisions in order to protect pensions, but exempts certain plans
administered by a “church or by a convention or associations of churches.” The exemption
was put in place ostensibly to prevent the government from unnecessarily
interfering with church affairs.
The lawsuit alleged Wheaton Franciscan and Ascension have
claimed the exemption, but do not qualify for it, because they are “neither run
by nor intimately connected to any church financially.” Rather, they are
largely operated by lay people, rather than clergy, and employees do not have
to profess any faith or creed to work for them. According to plaintiffs, the
exemption violates the constitutional prohibition barring government from
establishing a religion.
Plaintiffs allege that among defendants’ shortcomings,
defendants have misused the church exemption to underfund the pension by hundreds
of millions of dollars and have not informed employees of amendments to the
“Extension of the Church Plan exemption to Wheaton
Franciscan and Ascension Health, both non-church entities, privileges Wheaton
Franciscan and Ascension Health for their claimed faith at the expense of their
employees, who are told that their faith is not relevant to their employment,
yet who are then denied the benefit of insured, funded pensions, as well as
many other important ERISA (Employee Retirement Income Security Act)
protections,” plaintiffs alleged.
Defendants place their “tens of thousands of longtime
employees' justified reliance on their pension benefits at great risk,”
Further, plaintiffs contended defendants also enjoy
advantage over competitors, based on their “claimed religious beliefs,” as
defendants do not have to devote the same amount of resources to their pension
plan, as do other companies that are not exempt.
Plaintiffs asked the court to revoke the exemption and order
the companies to fully fund and administer the plan in accordance with the 1974
Act. They also want Wheaton Franciscan and Ascension to pay into the plan any
money they gained by allegedly breaching their fiduciary duty, as well as pay
any appropriate civil penalties.
suit also asked the court to order the plan be placed into a trust with an
independent fiduciary officer to oversee it.
Plaintiffs are represented by the firm of Cohen, Milstein, Sellers &
Toll, which has offices across the country, including Chicago, as well as by
Seattle-based Keller Rohrback Law Offices. A status hearing is set for Aug. 23,
with the case assigned to U.S. District Judge John Z. Lee.