Contributing Author: Dianne Schechter
The U.S. Supreme Court announced on December 2, 2016, that it will hear three cases that may have a multi-billion dollar impact on the funding of retirement plans for several large church-affiliated hospital systems across the country as well as many other entities that are religious-affiliated organizations. The cases turn on the issue of whether the “church plan” exemption under ERISA – which exempts religiously-affiliated organizations from much of the stringent pension plan funding, reporting and other requirements under ERISA – applies only if a church initially established the retirement plan or whether it is sufficient that the church-affiliated entity simply maintained the retirement plan. In each case, the IRS issued determination letters blessing the hospital’s decision to treat the retirement plans as ERISA-exempt church plans. The U.S. Court of Appeals for the Third, Seventh and Ninth districts have all ruled against the hospitals on their plans’ status as “church plans” exempt from ERISA.
The cases are Advocate Health Care Network v. Stapleton, Saint Peter’s Healthcare Sys. v. Kaplan, and Dignity Health v. Rollins. The three cases will be consolidated and heard together and will impact nearly three dozen additional lawsuits across the nation challenging how religiously-affiliated entities operate their retirement plans.