The lawsuit was brought on behalf of participants and beneficiaries of the Verity Health System Retirement Plan A and the Verity Health System Retirement Plan B (“the Plan”) against the fiduciaries of the Plan between December 2015 and October 2019. Verity Health System succeeded Daughters of Charity Health System, which operated its pension plan as if it was a “church plan.” While a church plan is exempt from ERISA (including its funding and insurance requirements), the Complaint alleges that the Daughters of Charity Health System was not a church and had an insufficient relationship with any church for its Plan to qualify as a church plan. Because the Plan claimed “church plan” status, the Plan did not meet the funding requirements of ERISA or pay any insurance premiums to the Pension Benefit Guaranty Corporation (“PBGC”).

The Daughters of Charity Health System became Verity Health System in 2015 when a private equity firm purchased the hospitals. The Plan was renamed the Verity Health System Retirement Plan and began complying with ERISA and covered by PBGC insurance. But the Benefits Administration Committee took no action to against the former fiduciaries of the Plan operated the Plan as a church plan and left it underfunded and uninsured.

When Verity Health System declared bankruptcy in 2018, the Plan had only been covered by PBGC insurance for two years meaning that PBGC only guaranteed 40% of pension benefits of participants of the Plan.

 Had the members of the Benefits Administration Committee taken action against the former fiduciaries, the Complaint alleges that they could have remedied the Plan’s underfunding and lack of payment of insurance premiums to the PBGC. The Complaint also alleges that the members of the Board of Directors between December 2015 and October 2019 breached their duties to monitor the members of the Benefits Administration Committee because they knew or would have known that the Committee failed to take any such action and the Board members likewise took no action to protect the participants and beneficiaries.

This lawsuit is brought on behalf of the following Class:

All participants in the Verity Health System Retirement Plan A and Verity Health System Retirement Plan B and beneficiaries of such participants whose benefits were reduced by the Pension Benefit Guaranty Corporation because the Plans were underfunded and underinsured.

Excluded from the Class are Defendants and their immediate families, any other individual who served as a fiduciary of the Plan and his or her immediate families, persons who served as officers or directors of the Daughters of Charity Health System or Verity Health System and their immediate families, and legal representatives, successors, and assigns of any such excluded persons.

The Complaint was filed on August 30, 2024 in the Central District of California.

Complaint - August 30, 2024