Dignity Health

Rollins v. Dignity HealthUnited States District Court for the Northern District of California
Case No. 13-1450

Church Plan ERISA Litigation

If you are an employee participating in a pension plan, the federal Employee Retirement Income Security Act (“ERISA”) makes sure your benefits will be there when you need them—except where ERISA does not apply. One of the few kinds of pension plans that is exempt from ERISA is a “church plan.” For years, Keller Rohrback has been representing employees in federal lawsuits against large healthcare companies that claim their pension plans are “church plans.” The lawsuits ask the federal courts to determine whether such plans are actually “church plans,” and ensure that employers properly fund the plans, and that employees obtain the safety and security of all ERISA protections.

You can find additional information on Keller Rohrback’s church plan cases in the Church Plan ERISA Litigation Resource Center.

Dignity Health Case Overview

Rollins v. Dignity Health, Case No. 13-1450, is one of Keller Rohrback’s church plan cases. In it, Plaintiffs Starla Rollins and Patty Wilson allege that Dignity Health, a California non-profit corporation and the fifth largest healthcare provider in the United States, is improperly claiming that its defined benefit pension plan (the “Dignity Health Pension Plan”) is exempt from ERISA as a church plan.

In the current version of the complaint, Plaintiffs allege various alternative reasons why the Dignity Health Pension Plan does not qualify as an ERISA-exempt church plan. For example, Plaintiffs allege that Dignity is not “controlled by or associated with” a church, as the church plan exemption requires. Plaintiffs also allege that the Plan does not satisfy the statutory requirement that a church plan be “maintained” by either a church or by a certain specific type of church-associated organization whose “principal purpose” is the funding or administration of benefit plans for church employees. Further, Plaintiffs allege that application of the church plan exemption to the Plan is an unconstitutional violation of the Establishment Clause.

Because Dignity does not believe it is required to comply with ERISA, it is violating ERISA in several respects. Plaintiffs allege that Defendants are violating ERISA by, among other things:

underfunding the Dignity Health Pension Plan;
failing to furnish participants with various ERISA-required notices;
failing to file ERISA-required reports with the Secretary of Labor; and
failing to purchase insurance for the Plan from the Pension Benefit Guarantee Corporation.

Case Status

The case was filed in 2013. At the outset of the litigation, Plaintiffs claimed that the Dignity Plan was not a church plan not only for the reasons mentioned above, but also because the plan was not “established” by a church. On December 12, 2013, the Honorable Thelton E. Henderson denied Defendants’ motion to dismiss, and in doing so held that an ERISA-exempt church plan must be established by a church. The following year, on July 22, 2014, Judge Henderson granted Plaintiff’s motion for partial summary judgment and held that because there is no genuine dispute that the plan was not established by a church, it was not a church plan. The Ninth Circuit affirmed this decision, but on June 5, 2017, the Supreme Court reversed. It held a church plan did not necessarily have to be established by a church as long as other requirements were met. It remanded the case to allow Plaintiffs to continue to litigate, in district court, their alternative arguments that the Dignity Plan failed to meet those other requirements.

Consistent with the Supreme Court’s remand, Plaintiffs filed an Amended Complaint on November 3, 2017. On September 6, 2018, the Honorable Jon S. Tigar denied Defendants’ motion to dismiss the amended complaint except as to one count. Plaintiffs filed a Second Amended Complaint on September 27, 2018 to amend that count, and Defendants filed their answer on October 25, 2018. At this point, the parties began to explore a possible settlement.

To facilitate a settlement, the parties jointly hired a nationally-known mediator, Ms. Jill Sperber, of the firm of JudicateWest in California. The parties began intensive mediation discussions, guided by Ms. Sperber, in late in 2018, which continued through April of 2019, when they notified Judge Tigar that they had reached an agreement in principle to settle the case. The final settlement agreement was completed in June of 2019, and presented to Judge Tigar for preliminary approval. Judge Tigar denied preliminary approval, citing certain specific features of the settlement agreement that he did not approve. However, his denial was “without prejudice” and he invited the parties to remedy the features cited in his opinion and submit a revised settlement agreement for preliminary approval.

The parties addressed those features in a revised settlement agreement, which they submitted to the court for preliminary approval in November 2019. Judge Tigar approved of the revisions in the new settlement agreement, except one. He did not approve of the provisions of the settlement dealing with the “vesting subgroup,” that is certain people who had worked for Dignity for more than three years but less than five years. He denied preliminary approval again, but again he did so “without prejudice.” The Court’s opinion invites us to provide the Court with further information about the views of members of the subgroup. Certain subgroup members have moved to intervene in the case, and as of September 10, 2020, that motion is pending.

The parties addressed those features in a revised settlement agreement, which they submitted to the court for preliminary approval in November 2019. Judge Tigar approved of the revisions in the new settlement agreement, except one. He did not approve of the provisions of the settlement dealing with the "vesting subgroup," that is certain people who had worked for Dignity for more than three years but less than five years. He denied preliminary approval again, but again he did so "without prejudice." The Court's opinion invited us to provide the Court with further information about the views of members of the subgroup. On November 2, 2020, the Court authorized certain subgroup members to intervene in the case to protect their interests.

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