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Wednesday, June 19, 2024 | Back issues
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Justices to Rule on Religious Hospital’s Pension Exemption

The Supreme Court said it will decide whether a federal pension law’s exemption for church retirement plans applies if the plan was not initially established by a church.

(CN) – The Supreme Court said it will decide whether a federal pension law’s exemption for church retirement plans applies if the plan was not initially established by a church.

The Employee Retirement Income Security Act, or ERISA, outlines specific safeguards for employee retirement plans, like minimum funding, vesting requirements and fiduciary responsibilities for plan administrators. However, the law exempts church plans from those requirements.

Maria Stapleton, Judith Lukas, Sharon Roberts and Antoine Fox are former and current employees of Advocate Health Care Network with vested claims to benefits under the company’s retirement plan.

Advocate runs 12 hospitals and 250 other health-care facilities in Illinois. It is not a church, but has contractual relationships with the Metropolitan Chicago Synod of the Evangelical Lutheran Church in America and the Illinois Conference of the United Church of Christ.

The employees filed a class-action lawsuit in 2014, claiming Advocate violated ERISA by not funding the plan at sufficient levels, requiring employees to work for five years before benefits are fully vested, and not clarifying participants’ rights to future benefits.

Stapleton and the other plaintiffs argued that, even if Advocate could dodge liability under ERISA’s church-plan exemption, the exemption is a violation of the First Amendment’s prohibition on a state establishment of religion.

A federal judge denied Advocate’s motion to dismiss the class action, finding that its employee retirement plan does not fall under ERISA’s church exemption because a qualifying church plan needs to be established by a church.

The Seventh Circuit affirmed in March, ruling that a plan established by a church-affiliated organization, such as a hospital, is not exempt from ERISA’s requirements.

“Although the legislative record clearly supports an intent to continue to allow employees of church-affiliated organizations to be included in church plans, no part of that record suggests an intent to allow a church-affiliated corporation to claim the exemption for a plan unless the church itself has established the plan,” Judge Ilana Rovner wrote for a three-judge panel.

In July, Advocate Health Care appealed to the U.S. Supreme Court, arguing in a petition for a writ of certiorari that church-affiliated organizations are exempt from ERISA, regardless of whether a church itself established the organization’s pension plan.

“The three federal agencies charged with interpreting ERISA—the Internal Revenue Service, Department of Labor, and Pension Benefit Guaranty Corporation — agree that such plans qualify for ERISA’s ‘church plan’ exemption, and since 1983 have issued opinion after opinion reaffirming that view,” the petition states. “Countless nonprofit religious hospitals, orphanages, schools, day-care centers, and old-age homes have structured their pension plans in reliance on these agencies’ views and on the until-now-unanimous lower court decisions confirming their exempt status.”

The Supreme Court granted Advocate a writ of certiorari late Friday. It will decide whether ERISA’s church-plan exemption applies only to retirement plans initially established by a church.

Per its custom, the high court did not comment on its decision to hear the case.

Categories / Appeals, Business, Employment, Religion

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