Religious Exemption Confounds at High Court

WASHINGTON (CN) – The justices of the Supreme Court struggled to divine meaning Monday from the omission of two words in a revised law that says religious groups need not face federal employee benefit regulations.

Complicating the issue is that a church may be directly involved in the creation and maintenance of a plan, or — in the case of a church-affiliated hospital, for example — it may have nothing to do with it.

“I’m torn, this could be read in either way in my mind,” Justice Sonia Sotomayor said this morning. “What do I go to, to break the tie?”

Congress had carved out an exception for so-called church plans when it adopted the Employee Retirement Income Security Act of 1974.

Though the original statute defined the term as plans “established and maintained for its employees by a church,” an amendment to the law in 1980 amendment added that it should also include “a plan maintained by an organization … controlled by or associated with a church,” such as religious hospitals.

Three religious hospitals told the Supreme Court on Monday that this was done to prevent the IRS from snooping into church books to determine what was and was not a legitimate church, creating confusion, uncertainty and possibly a constitutional problem.

Several employees of the hospitals had brought class actions in 2013, saying their benefits plans should not be exempt because a church did not establish them. Two of the hospitals, Advocate Health Care Network and Saint Peter’s Healthcare System, have ties to the Lutheran and Catholic churches, respectively. Dignity Health is sponsored by Catholic nuns.

The Third, Seventh and Ninth Circuit Courts of Appeals have all agreed with the employees, sending the case to the Supreme Court, where it was consolidated into one round of oral arguments.

Arguing on behalf of the hospitals, Arnold Porter attorney Lisa Blatt said that a reversal is necessary to safeguard 30 years of IRS rulings.

The precedent, Blatt said, promises a “torrent of undesirable and unintended consequences” for decentralized religions, such as Protestant churches and Jewish groups.

“It just defies both common sense and our background understanding under ERISA to require the church to establish someone else’s benefit plans when we know employers are usually the ones who set the employment benefits for their own employees,” Blatt said.

The U.S. government sided with the hospitals in a friend of the court brief, as well, and Deputy Solicitor General Malcolm Stewart backed Blatt’s arguments this morning. Blatt argued the it should not matter whether the hospital or the church established the benefits plans because church-affiliated groups maintain them, which satisfies the second condition the 1980 amendment created.

But Sotomayor questioned whether Congress really intended to carve out the gaping exception that would come from reading the amendment the hospitals’ way.

“They’re not doing anything different than any other hospital,” Sotomayor said.

An attorney for the hospital employees argued just that.

“What I’m saying is the church itself, these employees who are so defined are actually employees of the church agency,” said James Feldman, of Washington. “But the church itself has zero involvement with this plan.”

Feldman repeated an analogy made in briefs to a hypothetical statute that grants all disabled veterans free insurance, with an amendment tacked later saying “a person who is disabled and a veteran includes a person who served in the National Guard.”

Surely, Feldman argued, this would not mean anyone who served in the National Guard qualifies as a disabled veteran, just that people disabled while serving in the National Guard should still receive the benefit. In the same way, a plan being maintained by a church group would not satisfy the requirement that an actual church establish the plan, Feldman argued.

But the conservative justices on the court had a hard time accepting the prospect of reversing long-standing agency policy with one ruling.

“If that were so evident, why do the three government agencies responsible in this area – the IRS, the Department of Labor, the PBGC – why for 30 years did they take the opposite view?” Chief Justice John Roberts asked.

%d bloggers like this: