IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In re: The Ellwood City Community :

Health Foundation, a Pennsylvania :

Nonprofit Corporation :

: No. 1001 C.D. 2019

: Argued: May 15, 2020

Appeal of: The Ellwood City :

Community Health Foundation :

BEFORE: HONORABLE P. KEVIN BROBSON, Judge

HONORABLE ANNE E. COVEY, Judge

HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION BY JUDGE BROBSON FILED: July 21, 2020

The Ellwood City Community Health Foundation (Foundation) appeals from 

an order of the Court of Common Pleas of Lawrence County, Orphans’ Court 

Division (Orphans’ Court), dated June 24, 2019. The Orphans’ Court denied the 

Foundation’s Petition for Approval of the Separation of the Foundation and 

ECH Legacy, Inc. (ECH Legacy) and the Foundation’s Amended and Restated 

Articles of Incorporation and Bylaws (Petition). For the reasons set forth below, we 

reverse the Orphans’ Court order.

I. BACKGROUND

ECH Legacy, which was formerly known as Ellwood City Hospital, is a 

Pennsylvania nonprofit corporation that operated a general acute care community 

hospital (Hospital) in Ellwood City, Pennsylvania. (Reproduced Record (R.R.) 

at 6a.) The Foundation, which was formerly known as Ellwood City Hospital 

Foundation, is a Pennsylvania nonprofit corporation that, pursuant to its current 
2

articles of incorporation, operates exclusively for the benefit and support of 

ECH Legacy. (Id. at 9a-10a, 335a-43a.) In November 2012, ECH Legacy, with the 

approval of the Orphans’ Court, transferred its endowment funds (Endowment 

Funds), estimated at that time to be approximately $25,000,000, to the Foundation. 

(Id. at 10a-11a.) Since that time, the Foundation has served as a public charity 

supporting organization for ECH Legacy. (Id. at 11a, 124a.) In that role, the 

Foundation has been responsible for holding and managing the Endowment Funds

and has used the Endowment Funds exclusively to support ECH Legacy’s operation 

of the Hospital. (Id. at 7a, 11a.)

On September 22, 2017, the Orphans’ Court approved an asset purchase 

agreement (Asset Purchase Agreement) between ECH Legacy and Americore 

Health, LLC and Ellwood Medical Center, LLC (collectively, Americore) for the 

sale and transfer of substantially all of ECH Legacy’s assets to Americore, a 

for-profit company. (Id. at 11a.) Pursuant to the terms and conditions of the Asset 

Purchase Agreement, Americore and ECH Legacy agreed that Americore would 

assume sponsorship of and liability for the Retirement Plan for Employees of 

Ellwood City Hospital (Pension Plan). (Id. at 242a-43a.) Thereafter, on 

October 31, 2017, ECH Legacy transferred its assets to Americore, and Americore 

took control of the Hospital’s operations. (Id. at 11a, 88a.) On that same date, 

ECH Legacy and the Foundation entered into a separation agreement (Separation 

Agreement), pursuant to which: (1) the Foundation agreed to provide ECH Legacy 

with final funding in the amount of $11,000,000 for the payment of ECH Legacy’s 

known debts, liabilities, and expenses and $2,000,000 for the creation of a reserve 

to satisfy any of ECH Legacy’s unknown liabilities; (2) ECH Legacy agreed to

release and discharge the Foundation from its responsibility to support ECH Legacy 
3

and its liability for any of ECH Legacy’s obligations or liabilities; and (3) upon the 

Orphans’ Court’s approval of the separation of ECH Legacy and the Foundation, the 

Foundation’s affiliation with ECH Legacy would terminate and the Foundation

would amend its articles of incorporation and bylaws to reflect the separation of 

ECH Legacy and the Foundation, to expand the Foundation’s charitable purposes 

beyond the exclusive support of ECH Legacy, and to change the Foundation’s 

tax-exempt status from a public charity to a private foundation. (Id. at 11a-12a, 

88a-92a, 330a-31a.)

On March 12, 2019, the Foundation filed its Petition with the Orphans’ Court, 

seeking, inter alia, approval of the separation of ECH Legacy and the Foundation 

and approval of the Foundation’s proposed amended and restated articles of 

incorporation and proposed amended and restated bylaws. In its Petition, the 

Foundation indicated that, under its new objectives, which included “to improve, 

foster, promote, and enhance the quality of life and health for the general public of 

Ellwood City, Pennsylvania, the Counties of Lawrence and Beaver, Pennsylvania, 

and the surrounding geographical areas,” the Foundation intended to support, inter 

alia, the Meals on Wheels program operating in Ellwood City. (Id. at 13a-14a.) The 

Foundation also indicated that the Endowment Funds, which include both restricted 

and unrestricted assets, had a total market value of $8,989,392. (Id. at 15a-17a, 75a, 

99a-100a.) The Pennsylvania Office of the Attorney General (OAG), on behalf of 

the Commonwealth of Pennsylvania (Commonwealth), filed a response to the 

Foundation’s Petition, representing that the Commonwealth had no objection to the 

proposed separation of ECH Legacy and the Foundation but requesting that the 

Orphans’ Court enter an order requiring the Foundation to provide a complete 
4

accounting of the Endowment Funds from November 26, 2012, to the present. 

(Id. at 76a-81a.)

The Orphans’ Court held an evidentiary hearing on the Foundation’s Petition 

on June 12, 2019. At that time, the Foundation presented the testimony of 

E. Williams Matthews (Matthews), the chief financial officer for ECH Legacy and 

the executive director for the Foundation. (Id. at 86a-87a.) As the executive director 

for the Foundation, Matthews is responsible for overseeing the Foundation’s 

day-to-day functions and financial activities. (Id. at 87a.) Matthews testified that

the Foundation is seeking to amend its articles of incorporation and bylaws at this 

time because the Foundation 

no longer . . . support[s] a community individual nonprofit 

entity . . . . So the funds that [the Foundation] had in 

support of [ECH Legacy] can no longer be used to support 

the [Hospital] because [it is now owned by] a for-profit 

entity. So those funds have to be used [for] a nonprofit 

purpose. So in doing that, the articles of incorporation and 

the bylaws need to be changed to reflect that new direction 

of those funds. 

(Id. at 95a-96a.) Matthews testified further that, following the transfer of 

ECH Legacy’s assets and the Hospital’s operations to Americore, the Foundation 

has become a private foundation because it no longer qualifies as a public charity 

supporting organization. (Id. at 123a-24a.) Matthews also explained that, under its 

new proposed purpose, the Foundation intends to fund programs that support public 

health, including “pregnancy programs, prevention, drug and alcohol programs, 

[and] environmental programs that would promote better health[y] living,” as well 

as programs for senior transportation, family and child abuse, and medical education 

for individuals who contemplate going into the medical field and remaining within 

the Ellwood City community. (Id. at 98a-99a.)
5

Matthews testified further that, following the closing on the Asset Purchase 

Agreement and the transfer of ECH Legacy’s assets to Americore, the Foundation 

transferred $13,000,000 to ECH Legacy in accordance with the Separation 

Agreement—$11,000,000 to satisfy ECH Legacy’s outstanding debts and liabilities 

and $2,000,000 for any unknown liabilities. (Id. at 90a-91a.) He indicated that the 

total funds remaining and available to ECH Legacy from such transfer at the time of 

the June 12, 2019 hearing was $2,420,584, and that ECH Legacy has certain 

investments totaling approximately $1.9 million, which ECH Legacy will receive 

in 2022. (Id. at 104a-05a.) Matthews also explained, however, that ECH Legacy 

has total estimated liabilities of $1,269,239. (Id. at 105a, 109a.) He indicated that 

ECH Legacy is a defendant in 5 medical malpractice cases that have not yet been 

settled or otherwise resolved. (Id. at 106a.) In connection with those cases,

ECH Legacy could be responsible for an additional $9,720 in legal expenses 

(ECH Legacy has a $10,000 deductible for legal expenses per case), but that any 

further liability should be covered by a $20,000,000 tail coverage insurance policy 

that ECH Legacy purchased at the time that it sold its assets to Americore. 

(Id. at 106a-07a.) In addition to the medical malpractice cases, ECH Legacy also 

has potential liability for: (1) 3 workers’ compensation claims in the amount of 

$483,830 (ECH Legacy was self-insured up to $500,000 per claim); 

(2) unemployment compensation claims to individuals who were displaced in 

connection with the sale of its assets to Americore in the approximate amount of 

$13,000 (ECH Legacy was self-insured); and (3) a payback to the Centers for 

Medicare and Medicaid Services in the amount of $762,960. (Id. at 107a-09a.)

Matthews also testified that, on January 16, 2018, ECH Legacy made its final 

annual contribution to the Pension Plan in the amount of $510,000 for plan year 
6

May 1, 2016, to April 30, 2017, as set forth on the 2016 Form 5500 Annual 

Return/Report of Employee Benefit Plan (Form 5500). (Id. at 116a-17a, 487a-92a.) 

He further explained that, even though ECH Legacy had already transferred its assets 

to Americore and Americore had assumed responsibility for the Pension Plan and 

had become the Pension Plan’s sponsor prior to that date, ECH Legacy made the

annual contribution on January 16, 2018, because ECH Legacy was the Pension 

Plan’s sponsor for plan year May 1, 2016, to April 30, 2017. (Id. at 118a.) He also 

explained that Americore, as the Pension Plan’s sponsor for plan year May 1, 2017,

to April 30, 2018, filed the 2017 Form 5500 electronically in February 2019, but that 

Americore did not make the required annual contribution to the Pension Plan in the 

amount of $500,320. (Id. at 115a-16a, 118a-21a, 134a-35a, 480a-85a.) Matthews 

indicated that he did not know why Americore had not made the annual contribution 

for plan year May 1, 2017, to April 30, 2018, or if Americore would make that 

annual contribution or any future annual contributions to the Pension Plan. 

(Id. at 135a.)

When the Orphans’ Court questioned whether the Foundation had sufficient 

assets to pay ECH Legacy’s unfunded portion of the Pension Plan—i.e., $7,984,499 

as of June 30, 2017, which date is a few months before ECH Legacy transferred its 

assets to Americore—Matthews stated “the [F]oundation has [$9,000,000].” 

(Id. at 135a-36a, 515a.) Matthews nevertheless explained that, based on his 

discussions with the actuary for the Pension Plan around the time that ECH Legacy’s 

assets were transferred to Americore, he did not believe that ECH Legacy would 

have any responsibility to fund the Pension Plan because that responsibility would 

fall onto Americore as the Pension Plan’s sponsor and, in the event that Americore 

failed to fully fund the Pension Plan, the Pension Benefit Guaranty Corporation 
7

(PBGC)1 would guarantee the individual participants’ benefits. (Id. at 136a-37a.) 

Despite this position, Matthews indicated that he did not have any documentation 

from the PBGC absolving ECH Legacy from liability for the Pension Plan or any 

guarantee from Americore that it had set aside sufficient funds to fulfill its obligation 

to satisfy ECH Legacy’s unfunded portion of the Pension Plan. (Id. at 137a-38a.) 

Matthews also indicated that ECH Legacy had not pursued and did not intend to 

pursue any action against Americore to require Americore to make the $500,320 

annual contribution to the Pension Plan for plan year May 1, 2017, to April 30, 2018. 

(Id. at 140a-41a.)

By opinion and order dated June 24, 2019, the Orphans’ Court denied the 

Foundation’s Petition. In so doing, the Orphans’ Court reasoned:

The Foundation was formed for the purpose of 

supporting [ECH Legacy], a community hospital and a 

non[]profit corporation. Many people donated money to 

[ECH Legacy] and to the Foundation so that the people of 

Ellwood City would continue to have an acute care 

community hospital which could serve their medical 

needs. [ECH Legacy] had an endowment fund of 

approximately $25 million . . . in 2012, which was 

transferred to the Foundation to be used exclusively for the 

support of [ECH Legacy]. Due to financial downturns and 

problems experienced by many local community 

hospitals, [ECH Legacy] continued to lose money at an 

alarming rate. The losses were such that [ECH Legacy] 

and the Foundation would soon have spent all of the 

endowment monies and [ECH Legacy] would have to 

close [the Hospital]. It is for this reason that 

[ECH Legacy’s b]oard transferred the physical assets of 

[ECH Legacy] to Americore . . . [a] for profit 

1 PBGC, a division of the United States Department of Labor, was created by 

Section 4002 of the Employee Retirement Income Security Act of 1974 (ERISA), 

29 U.S.C. § 1302, to, inter alia, guarantee the payment of nonforfeitable benefits—i.e., vested 

benefits—of single-employer retirement plans, like the Pension Plan. See 29 U.S.C. §§ 1302, 

1322.
8

corporation[]. It was [ECH Legacy’s b]oard’s hope that 

the for profit entit[y] could keep [the H]ospital functioning 

to provide services for the people of Ellwood City.

However, the transfer of assets does not relieve 

[ECH Legacy] or the Foundation . . . from paying the 

obligations that were incurred before the assets were 

transferred/sold to Americore . . . . ECH [Legacy] and the 

Foundation recognized their obligation to pay 

[ECH Legacy’s] bills, all except for the obligation to [the]

Pension Fund. The Foundation’s stated mission is to 

support [ECH Legacy] and provide the funds to pay its 

bills. During the operation of the Hospital, (prior to the 

asset transfer to Americore), [ECH Legacy] employed a 

large number of people. [ECH Legacy] agreed to pay not 

only the employee’s [sic] wages, but also to fund [the]

Pension Plan. Until [ECH Legacy’s] debt and obligation 

to their [sic] employees has been satisfied, the Foundation 

has not completed its mission.

This [Orphans’] Court cannot approve and does not 

approve of the proposed change in the purposes of the 

Foundation that would divert available funds to other 

charitable purposes, while leaving the . . . Pension [Plan]

severely underfunded. The Foundation has the ability to 

make . . . the Pension [Plan] whole. Until the Foundation 

satisfies all the obligations and debts of [ECH Legacy], its 

funds cannot be diverted to other purposes. The 

Foundation’s Tenth Article of Incorporation states in clear 

and unambiguous words, “the [Foundation] shall not 

engage in activities which are not in furtherance of the 

above stated purposes or operate to support or benefit any 

organization other than the above referred publicly 

supported organization[”] ([ECH Legacy]). Until those 

obligations are fulfilled, this [Orphans’] Court will not 

approve a change in the Foundation’s charitable purposes.

(Orphans’ Ct. Op., June 24, 2019, at 7-8.)

The Foundation appealed the Orphans’ Court’s opinion and order to this 

Court, and the Orphans’ Court directed the Foundation to file a concise statement of 

errors complained of on appeal pursuant to Pennsylvania Rule of Appellate 
9

Procedure (Rule) 1925(b). In its Rule 1925(a) opinion, the Orphans’ Court further 

reasoned:

The Foundation misunderstands the purpose of . . . [the] 

PBGC and [ECH Legacy’s] obligation to its former 

employees.

. . . .

The liability to fully fund an underfunded [pension] 

plan is placed on the “employer” under [ERISA].

[2]

 

[ERISA] makes it clear that when an employer ceases 

operations, as [ECH Legacy] did [as of 

October 31, 2017], it must make arrangements with [the] 

PBGC to make payments to fully fund the pension 

liability. The employer[] in this case, [ECH Legacy,] 

would need to receive a waiver signed by the Secretary of 

the Treasury to avoid further liability. At the hearing, the 

Foundation did not provide the [Orphans’] Court with a 

waiver signed by the Secretary of the Treasury, or any 

written acknowledgment from [the] PBGC that 

[ECH Legacy] was released from liability for the 

[P]ension [Plan]. Nor did the Foundation provide the 

[Orphans’] Court with a legal opinion letter signed by an 

attorney that certifies that [ECH Legacy] can divert its 

existing funds, which are sufficient to pay the 

underfunded pension liability, and be legally relieved of 

liability to either the Pension [Plan’s f]und or to [the] 

PBGC.

. . . . 

[ECH Legacy] operated and employed personnel 

for over 100 years until October 31, 2017. As part of their 

promised and earned compensation, the several hundred 

employees who are covered by the . . . Pension Plan were 

promised certain defined benefits by [ECH Legacy]. That 

[Pension P]lan is underfunded by $7,984,499.00. The 

Foundation has one corporate purpose[,] which is to fund 

the operations of [ECH Legacy]. After paying all of 

[ECH Legacy’s] bills, except [ECH Legacy’s] obligation 

to the . . . Pension Plan, the Foundation has more than 

2 29 U.S.C. §§ 1001-1461.
10

enough money to fully fund the . . . Pension Plan. It just 

refuses to do so and now asks the [Orphans’] Court to 

approve a change to its [a]rticles of [i]ncorporation and 

[b]ylaws so that it can separate from its obligation to 

[ECH Legacy] and to [ECH Legacy’s] former employees 

and spend the money on other generalized charitable 

purposes. The Foundation received its funding from 

[ECH Legacy’s E]ndowment [F]und[s] to pay 

[ECH Legacy’s] bills and obligations. One very vital 

obligation remains. [ECH Legacy] and the Foundation 

have a legal obligation to the former employees of 

[ECH Legacy] to use it’s [sic] money to fully fund the . . . 

Pension [Plan f]und, before it can be said to have 

completed its corporate purpose. It is for this reason that 

the request of the [Foundation] to separate from 

[ECH Legacy] and to amend its [a]rticles of 

[i]ncorporation and [b]ylaws to allow it to use its funds 

for other generalized charitable purposes is denied. 

. . . The Foundation has asked this [Orphans’] 

Court to approve the diversion of its nonprofit corporate 

funds, at a time when the annual contribution obligation 

of Americore . . . is in default, there is no reasonable 

expectation of any future contributions, and neither 

[ECH Legacy] [n]or the Foundation have any intention of 

suing Americore . . . to compel the payment of the 

obligated contributions. In consideration of the foregoing 

facts, such a request by the Foundation places 

[ECH Legacy’s] former employees’ pensions at risk and 

into a distressed status and forces the burden of the 

Foundation and [ECH Legacy] to fund the [P]ension 

[P]lan onto . . . [the] PBGC, an independent federal 

agency. This [Orphans’] Court will not authorize or 

condone the Foundation’s request. 

In the Foundation’s [s]tatement of [e]rrors 

[c]omplained of on [a]ppeal, the Foundation makes note 

that the [Orphans’] Court approved the Asset Purchase 

Agreement between [ECH Legacy] and Americore . . . . 

At the time of the [Orphans’] Court approval for the 

transfer, the testimony established that the Foundation 

had sufficient monies on hand to pay all [ECH Legacy] 

debts including the $7,984,499.00 needed to fully fund 

the [P]ension [P]lan. The Foundation and [ECH Legacy] 
11

have made it clear that they will not seek to compel 

[Americore] to comply with the Asset Purchase 

Agreement and fully fund the [P]ension [P]lan. Now the 

Foundation is asking this [Orphans’] Court for approval 

to divert its remaining funds to other non-hospital related 

purposes and be relieved of its obligation to fund the 

[Pension Plan]. That request is refused. 

(Orphans’ Ct. Op., Sept. 16, 2019, at 3-7 (citation omitted).)

II. ARGUMENTS ON APPEAL

On appeal to this Court,3the Foundation argues that the Orphans’ Court 

committed an error of law by denying its Petition because ECH Legacy satisfied all 

of its funding obligations and neither ECH Legacy nor the Foundation retained any 

liability for the Pension Plan. The Foundation further argues that, even assuming

arguendo, that ECH Legacy could have some future contingent liability for the 

Pension Plan, such liability is not chargeable to the Foundation.

4

III. DISCUSSION

As to its first issue, the Foundation argues that the Orphans’ Court committed 

an error of law by denying its Petition because ECH Legacy satisfied all of its 

funding obligations to the Pension Plan prior to closing on the Asset Purchase 

Agreement and neither ECH Legacy nor the Foundation retained any liability for the 

Pension Plan after ECH Legacy’s assets were transferred to Americore. More 

specifically, the Foundation contends that the Orphans’ Court’s decision to deny its 

Petition was based on a mistaken determination that ECH Legacy, and by extension

the Foundation, retained some obligation to fund the Pension Plan following the sale 

3

“On appeal from an order of the orphans’ court, this Court’s scope of review is limited to 

determining whether the record is free from legal error and whether the court’s factual findings are 

supported by the evidence.” In re Estate of Berry, 921 A.2d 1261, 1263 n.1 (Pa. Cmwlth.), appeal 

denied, 934 A.2d 1279 (Pa. 2007).

4 OAG notified this Court that it did not intend to participate in this appeal, and, thus, 

OAG did not file a brief.
12

of ECH Legacy’s assets to Americore, a separate for-profit corporation. The 

Foundation contends that, contrary to the Orphans’ Court’s determination,

ECH Legacy and the Foundation have not retained any liability for the Pension Plan

because: (1) for the plan years during which it served as the Pension Plan’s sponsor, 

ECH Legacy made all of its annual contributions to the Pension Plan in a timely 

manner; (2) ECH Legacy transferred liability for the Pension Plan, including the 

responsibility to fund the Pension Plan, to Americore as part of the Asset Purchase 

Agreement, an agreement that had been reviewed and approved by the Orphans’ 

Court before it was finalized; (3) the Pension Plan was not terminated on or before 

the date that ECH Legacy transferred its assets to Americore (the Hospital’s 

operations did not cease on or before that date), and Americore, as the Pension Plan’s 

sponsor, will be responsible for any termination funding if the Pension Plan is 

terminated in the future; and (4) it is extremely unlikely that the PBGC will hold 

ECH Legacy liable as a predecessor sponsor of the Pension Plan, as there is no 

evidence of record to suggest that ECH Legacy transferred its assets to Americore 

for the purpose of evading its liability to the Pension Plan.

5

“ERISA ‘is a comprehensive statute designed to promote the interests of 

employees and their beneficiaries in employee benefit plans.’” Barnett v. SKF USA, 

Inc., 38 A.3d 770, 776 (Pa.) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 

5 The Foundation further contends that, even if Americore fails to satisfy its funding 

obligations to the Pension Plan, ECH Legacy would have no direct liability to the Pension Plan’s 

participants because the PBGC guarantees all of the participants’ vested benefits in the Pension 

Plan. This argument appears to relate not to the question of whether ECH Legacy and/or the 

Foundation retained any obligation to fund the Pension Plan following the sale of ECH Legacy’s 

assets to Americore, but rather the question of to whom ECH Legacy could be liable for its failure 

to fulfill any potential funding obligations to the Pension Plan. For these reasons, we do not see 

how this argument is relevant to our review of the Orphans’ Court’s decision on appeal, and, 

therefore, we do not address it in any further detail in this opinion.
13

(1983)), cert. denied, 568 U.S. 942 (2012). “It has long been recognized that one of 

[the United States’] Congress’ principal goals in enacting [ERISA] was to ensure 

that, upon retirement, employees receive the pension benefits to which they are 

entitled.” Id. (citing Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 

720 (1984) (R.A. Gray)). “It was also Congress’ aim to ensure the proper 

administration of pension plans, both during the years of an employee’s active 

service and in his or her retirement years.” Id. (citing Boggs v. Boggs, 520 U.S. 833, 

839 (1997)).

In order to achieve Congress’ goal to protect employees’ pension benefits, 

ERISA, as well as the Internal Revenue Code (Code),6 mandate that single-employer 

defined benefit pension plans, such as the Pension Plan, meet statutory minimum 

funding standards. 29 U.S.C. § 1082(a); 26 U.S.C. § 412(a). In the event that a 

pension plan does not satisfy the minimum funding standard for any given plan year, 

ERISA and the Code require that the employer/sponsor of the pension plan make an 

additional contribution to the pension plan within 81⁄2 months of the end of the plan 

year—i.e., a minimum required contribution that is calculated based upon the 

difference between the pension plan’s assets and an actuarially determined funding 

target for the applicable plan year. 29 U.S.C. §§ 1082(a)-(b), 1083(a), (j)(1); 

26 U.S.C. §§ 412(a)-(b), 430(a), (j)(1).

Another way in which ERISA seeks to achieve Congress’ goal to protect 

employees’ pension benefits is through the creation of “a plan termination insurance 

program, administered by the [PBGC].” R.A. Gray, 467 U.S. at 720. In effect, 

ERISA “provide[s] each employee with an insurance policy against his employer’s 

breach of contract on pension matters.” In re Consol. Litig. Concerning Int’l 

6 26 U.S.C. §§ 1-9834.
14

Harvester’s Disposition of Wis. Steel, 681 F. Supp. 512, 516 (N.D. Ill. 1988) 

(International Harvester). “The PBGC is the insurer, paying from a fund created 

from premiums paid by every American employer with a pension plan.” Id. In order 

to prevent abuse of this insurance program, ERISA imposes liability on employers. 

Id. For single-employer plans, “liability is incurred at [the time of] termination of 

the [pension] plan and it runs directly to the PBGC.” Id.; see also 29 U.S.C. § 1362. 

Typically, a pension plan’s termination occurs through distress or involuntary action

by the PBGC, but a termination can also occur if there is a “substantial cessation of 

operations”—i.e., “a permanent cessation of operations at a facility which results in 

a workforce reduction of a number of eligible employees at the facility equivalent to 

more than 15 percent of the number of all eligible employees of the employer.” 

29 U.S.C. § 1362(a), (e). “If the employer has failed to fund any ERISA-insured 

pension obligations[,] the PBGC has in effect an insurer’s claim for subrogation.” 

Int’l Harvester, 681 F. Supp. at 516. In other words, “[i]f the employee cannot 

collect from his employer on a pension insured under ERISA, then the PBGC pays 

the guaranteed amount[, b]ut the PBGC is in effect subrogated to the employee’s 

claim against the employer and may pursue the non-paying employer.” Id. In 

addition to current employers/sponsors, ERISA also imposes termination liability on 

predecessor plan sponsors if the principal purpose of the sale transaction was to 

evade liability to the pension plan and the sale transaction occurred within 5 years 

of the date of the pension plan’s termination. Pension Benefit Guar. Corp. v. White 

Consol. Indus., Inc., 998 F.2d 1192, 1197 (3d Cir. 1993) (White Consol. Indus. I), 

cert. denied, 510 U.S. 1042 (1994); see also 29 U.S.C. § 1369(a).7

7 Essentially, 29 U.S.C. § 1369 is a “codification of the implicit predecessor liability theory 

of [29 U.S.C. § 1362], which was enunciated for the first and only time in [International 

(Footnote continued on next page...)
15

In this case, it is undisputed that ECH Legacy satisfied all of its funding 

obligations to the Pension Plan with respect to the minimum required contributions. 

The record reflects that, on January 16, 2018, ECH Legacy made its final annual 

contribution to the Pension Plan in the amount of $510,000 for plan year 

May 1, 2016, to April 30, 2017, and there is no evidence of record to suggest that 

ECH Legacy failed to make any of the minimum required contributions to the 

Pension Plan prior to that time. (R.R. at 116a-17a, 487a-92a.) In addition, 

Americore, which, pursuant to the Asset Purchase Agreement, became the Pension 

Plan’s sponsor and assumed liability for any funding obligations to the Pension Plan 

as of October 31, 2017, was responsible for any minimum required contributions to 

the Pension Plan for plan years beginning May 1, 2017, and thereafter. (See

R.R. at 242a-43a, 480a-85a.) ECH Legacy’s responsibility to make annual 

minimum required contributions to the Pension Plan ended when ECH Legacy was 

no longer the Pension Plan’s sponsor. See 29 U.S.C. § 1082. For these reasons, 

there is no basis upon which ECH Legacy could be held responsible directly to the 

Pension Plan for the payment of any minimum required contributions.

In addition, it seems unlikely that the PBGC would be successful in imposing

termination liability onto ECH Legacy either as the sponsor of the Pension Plan or 

Harvester].” Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 215 F.3d 407, 413 

(3d Cir. 2000) (White Consol. Indus. II). In International Harvester, the United States District 

Court for the Northern District of Illinois held:

[P]redecessor liability under the former [Section] 1362 requires 

proof of [2] elements, [1] subjective and [1] objective. An employer 

who, with a sale of his business, delegates his pension obligations is 

liable if a principal purpose of the sale is to evade pension liability 

and if, objectively, his buyer lacks a reasonable chance of meeting 

those obligations.

Int’l Harvester, 681 F. Supp. at 526.
16

as a predecessor sponsor of the Pension Plan. As set forth above, except in very 

limited circumstances, ERISA imposes termination liability on the pension plan’s 

sponsor as of the date of the pension plan’s termination. See 29 U.S.C. § 1362. 

Thus, in the event that the Pension Plan is terminated at some date in the future, 

Americore, not ECH Legacy, could be held secondarily liable to the PBGC for any 

underfunding of the Pension Plan. The Orphans’ Court, nevertheless, seems to 

suggest that ECH Legacy could be held liable to the PBGC as the Pension Plan’s 

sponsor under Section 1362(e), because ECH Legacy experienced a “substantial 

cessation of operations” as of October 31, 2017, the date on which it transferred its 

assets to Americore. We disagree. There is simply no evidence in the record to 

suggest that the Hospital’s operations ceased or that there was a workforce reduction 

at the time that ECH Legacy transferred its assets to Americore. See

29 U.S.C. § 1362(e). Quite to the contrary, the record reflects that Americore both 

took over and continued the Hospital’s operations following the asset transfer. In 

addition, there would be no basis upon which the PBGC could hold ECH Legacy 

liable as a predecessor sponsor of the Pension Plan if the Pension Plan is terminated 

within 5 years of October 31, 2017, because there is no evidence of record to suggest 

that ECH Legacy transferred its assets to Americore with a principal purpose of 

evading liability to the Pension Plan. See 29 U.S.C. § 1369(a).

Moreover, while we commend the Orphans’ Court for attempting to protect 

the Hospital’s employees and their pension benefits, we believe that the time to 

question ECH Legacy’s liability for the underfunding of the Pension Plan was at the 

time that the Orphans’ Court reviewed the Asset Purchase Agreement—i.e., at a time 

when ECH Legacy was the Pension Plan’s sponsor and was responsible for the 

Pension Plan and its funding. We recognize that the Orphans’ Court’s approval of 
17

the Asset Purchase Agreement came at a time when the parties and the Orphans’ 

Court were trying to save the Hospital and the many jobs that would have been lost 

if ECH Legacy was forced to close the Hospital’s doors, but, given the law and 

circumstances outlined above, we simply cannot uphold the Orphans’ Court’s 

decision. For all of these reasons, we must conclude that the Orphans’ Court

committed an error of law by denying the Foundation’s Petition because 

ECH Legacy satisfied all of its funding obligations to the Pension Plan prior to 

closing on the Asset Purchase Agreement and ECH Legacy did not retain any 

liability for the Pension Plan after its assets were transferred to Americore.

8

IV. CONCLUSION

Accordingly, we reverse the Orphans’ Court’s order.

P. KEVIN BROBSON, Judge

8 Given our disposition above, we do not consider the Foundation’s remaining issue on 

appeal—i.e., whether the Orphans’ Court committed an error of law by denying the Foundation’s

Petition because ECH Legacy’s potential future liability for any underfunding of the Pension Plan 

is not chargeable to the Foundation.
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In re: The Ellwood City Community :

Health Foundation, a Pennsylvania :

Nonprofit Corporation :

: No. 1001 C.D. 2019

:

Appeal of: The Ellwood City :

Community Health Foundation :

O R D E R

AND NOW, this 21st day of July, 2020, the order of the Court of Common 

Pleas of Lawrence County, Orphans’ Court Division, is hereby REVERSED.

P. KEVIN BROBSON, Judge