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The US Supreme Court on June 5 unanimously ruled[1] that pension plans maintained by church-affiliated organizations (including hospitals) may be exempt from ERISA’s requirements, regardless of what entity established the plan. At issue was the US Congress definition of “church plan,” which left unclear whether a pension plan maintained by a church-affiliated organization (such as a hospital) only qualified for an exemption if the plan also was established by a church in the first instance.

Advocate Health Care v. Stapleton, St. Peter’s Healthcare v. Kaplan, and Dignity Health v. Rollins, the three consolidated cases before the Court, are but three in a recent wave of litigation challenging pension plans maintained by church-affiliated organizations. Participants in these plans claimed, among other things, that because a church did not establish the plans, those plans were subject to ERISA—including its notice and funding requirements.

But the Supreme Court disagreed in an opinion authored by Justice Elena Kagan. Primarily focusing on statutory text, the Court held that Congress intended to define a church plan as: (1) any plan established and maintained by a church, as well as (2) a plan maintained by a church-affiliated organization, even if that plan was established by an entity other than a church. The Court further reasoned that the entity establishing a church plan is of little import because the organization maintaining the plan is primarily responsible for its funding and administration.

The Supreme Court’s opinion sheds some light on the path of organizations (such as hospitals) facing church plan challenges, but those claiming the exemption may not be able to close this chapter just yet. For example, the Supreme Court declined to opine on whether internal benefits committees qualify as church-affiliated organizations, presumably leaving this issue for future litigation (although given the prevalence of these committees and the role they play, the issue should not prove too onerous for church-affiliated hospitals). In a concurring opinion, Justice Sonia Sotomayor observed that the landscape of church-affiliated organizations has changed since Congress first defined the exemption, and a congressional revisit of this issue may be due.

[1]Justice Neil Gorsuch did not take part in the Court’s decision.