The recent decision by the Erlanger Health System Board of Trustees to immediately suspend lump-sum payments from the hospital's pension plan may have violated the Tennessee Open Meetings Act.
Because Erlanger is a public hospital governed by a board of trustees, state law requires that "adequate public notice" be provided before regular or special meetings.
Deborah Fisher, executive director of the Tennessee Coalition for Open Government, said the law doesn't define what the phrase "adequate public notice" means, but that the court has ruled in the past that public meeting notice must reasonably describe the proposed actions of a governmental body based on the circumstances.
A copy of the meeting agenda was posted on the Erlanger board website before the monthly meeting on Sept. 24, when the vote to suspend lump-sum payments took place. However, the agenda did not mention the board's plan to discuss changes to the pension or that a resolution related to the pension plan was coming before the board for a vote, as it does for other resolutions.
Resolution approving amendment to Erlanger Pension Retirement Plan and TrustView
Fisher said that by not including the plans on the agenda, it's possible that the board's actions were illegal.
"There's a legal issue that the courts would have to decide, and someone who said it wasn't adequate notice could have a good chance of winning that lawsuit," Fisher said. "But there's also just what's right and what's wrong, and it's wrong to not include something on your agenda."
The board's decision affected about 1,300 current Erlanger employees and 1,400 former employees who are vested in the plan but not yet retired. To save money in the short term, the agency took away their option to select an up-front, lump-sum payment of pension payments rather than accepting a monthly stipend over time.
The decision does not affect Erlanger employees who were hired after June 30, 2009, when the health system stopped offering a traditional pension in favor of a defined contribution plan, akin to a 401(k) program.
Erlanger board chair Linda Moss Mines said in an emailed statement on Monday that she and her colleagues work hard to comply with Tennessee's Open Meetings Act.
"As chair of the board, I am comfortable that we were compliant in this instance ... the board's actions on Sept. 24 were absolutely reasonable and necessary under the circumstances," Mines said.
The last time the board modified the hospital's pension plan in 2014, the resolution was first presented and voted on during a public budget and finance committee meeting before going before the full board in a second public meeting.
The board's latest effort to address the pension funding had been in the works for about six months, trustees said during the September meeting. Erlanger officials said in a statement that the resolution was "the culmination of approximately six months of comprehensive research, analyses and consultation with hospital management, the actuarial team, the financial advisers and legal advisers."
The move was an effort to better fund the pension plan, which was about 36% funded — or $83.5 million underfunded — as of June 30.
The option for retirees to receive their pension benefits in an up-front lump sum, which is the most popular option for receiving those benefits, will remain suspended until the plan is 80% funded, according to the resolution passed by the board.
Instead, participants in the pension plan who retire before funding reaches the 80% mark must receive their benefits in monthly installments.
The resolution also ended the option for participants who continue to work past age 65 to receive an actuarially adjusted benefit upon retirement, and it changes the death benefit payable to the beneficiary of an active participant to 50% of the participant's accrued benefit.
Contact Elizabeth Fite at email@example.com or follow her on Twitter @ecfite.