Catholic health provider agrees to $42 million settlement in class-action retirement lawsuit

The Catholic health system Providence Health & Services has agreed to a $42 million payout as part of a class-action lawsuit regarding the management of its retirement plan.

The lawsuit was originally brought in October 2024 by former Providence employee Victoria Halter along with a class of plaintiffs who had participated in Providence’s 401(k) retirement plan.

The health system has its roots in a network of hospitals founded by the Sisters of Providence starting in the mid-19th century. Providence says it carries out its health care undertakings “as expressions of God’s healing love, witnessed through the ministry of Jesus.”

The suit alleged that Providence failed to properly use company funds to cover expenses related to its 401(k) retirement plan. It claimed that participants in the plan were required to pay “significant portions” of expenses that should have been covered by other assets.

The filing explicitly accused the company of “improper, disloyal, and imprudent exercise of discretion” when managing the plan finances, and of putting the interests of Providence ahead of the plan beneficiaries. It accused the company of violating the federal Employee Retirement Income Security Act.

A settlement filed on Feb. 13 and obtained by EWTN News says Providence agreed to contribute nearly $42,725,000 to the plaintiffs in the class-action suit, though the filing asserts that the company denies “all liability” and “all allegations of wrongdoing.”

The eight-figure settlement “shall in no event be construed as, or be deemed to be evidence of, an admission … of any fault or liability whatsoever,” the agreement states.

The major settlement, which is still subject to court approval, comes amid wider concerns of Catholic retirement plans around the U.S.

The National Catholic Register reported in December 2025 on multiple U.S. dioceses and Catholic employers facing hundreds of millions of dollars in pension fund shortfalls.

“More than 180 member organizations” are affected by the shortfall in the pension fund run by Christian Brothers Services, which has asked members to dramatically boost their contributions to cover the gap.

The total gap facing the company as of July 2025 was about $800 million, the difference between the company’s $1.55 billion in assets and $2.35 billion in liabilities.

Also in December 2025, the Register reported that former Albany, New York, Bishop Edward Scharfenberger filed for personal bankruptcy protection after a jury found him partly liable for the collapse of a Catholic hospital pension fund that left about 1,100 retirees without pension payments.

The jury found Scharfenberger 10% liable in the $54.2 million judgment, which concerned the failed pension plan once provided by St. Clare’s Hospital in Schenectady, New York.