The system, the suit contends, operates the plan as if it falls under the “church plan” exemption under the Employee Retirement Income Security Act, even as previous rulings have made a distinction between churches and religious healthcare providers.
Despite the system's worsening financial picture, a sale to Prime would not protect retirement funds, the plaintiffs argue.
“Prime has not committed to operate the plan as an ERISA-covered plan, nor has it committed to address the plan's enormous funding shortfall pursuant to the requirements of ERISA,” the lawsuit states. “Prime has also raised the possibility of putting the health system into bankruptcy, which would further endanger the pensions of plaintiffs and the other plan participants.”
The plaintiffs are asking the court to force the system to bring the pension plan up to ERISA standards and to appoint an independent fiduciary to protect their interests. The pension plan covers 8,800 employees, according to the complaint.
Elizabeth Nikels, the spokeswoman for Daughters of Charity, countered that the plaintiffs and the SEIU are speculating about the terms of the definitive agreement. Under the terms of the deal, Prime will take full responsibility for pension obligations for former and current employees, she said. Moreover, the transaction coverts the under pension plan from a church plan to an ERISA plan.
“Preserving pensions was a top priority for the DCHS board when it established its sale criteria,” she said in an e-mail. “No other bidder but Prime Healthcare would accept full responsibility for the pensions of the 16,000-plus union and non-union employees. This lawsuit is a dangerous and unacceptable action and we are confident that the suit is without merit.”
The suit also has received support from the United Nurses Associations of California, which represents 800 registered nurses at St. Francis Medical Center, a Daughters of Charity facility in Lynwood.
The SEIU, which is engaged in a labor dispute with Prime, has vowed to stop the Daughters of Charity sale and has launched a media campaign to urge Attorney General Kamala Harris to block the deal.
Prime in August filed its own suit against the SEIU, accusing the union of using “extortionate assaults on virtually every aspect of Prime's business” to pressure it into unionizing its workforce.
Follow Beth Kutscher on Twitter: @MHbkutscher