Two former employees of the Catholic Health East hospital chain allege in a federal lawsuit filed this week in Philadelphia that the nonprofit's pension plans are underfunded by more than $438 million.
Albert R. Chavies and Thomas Holland, who filed the suit Thursday, allege that Catholic Health East wrongfully claims a religious status for its pension plans "to lighten its pension obligations and liabilities, not to adhere to a religious faith."
The health-care network, based in Newtown Square, claims its defined-benefit pension plans as "church plans" under federal rules governing retirement funds.
According to the suit, Catholic Health East "wants to maintain and impose a religious status . . . only on the retirement dollars of its employees."
The suit argues that CHE should not qualify for church-plan status, and that the way it uses the status is unconstitutional. The status also "unfairly disadvantages CHE competitors," the suit says.
Representatives of CHE could not be reached for comment Friday night.
The plaintiffs, who are seeking class-action status, say in the suit that CHE is not controlled or funded by the Catholic Church. CHE employees are not required to be Catholic, the suit says.
"It is long since removed from the days when nuns ran the hospitals, spread the gospel, and faithfully stewarded retirement assets for their employees," the suit says.
Catholic Health East employs 60,000 people in 11 states. It operates "in most respects like other nonprofit hospital conglomerates," the suit says.
According to the suit, "CHE itself engages in elective, contraceptive sterilization practices and employs doctors who perform abortions, vasectomies, and in vitro fertilization and dispense contraceptives when these practices are considered immoral, illegal, and evil by the Catholic Church."
The suit seeks to have the church-plan status voided and have the plans made whole for any losses. The suit also calls for civil money penalties to be paid to the plaintiffs.
CHE and two executives are named as defendants.