Can Church-Affiliated Groups Get a Religious Exemption Too? Supreme Court Hears Arguments
Three lawsuits centered on whether church-affiliated hospitals can be exempted from federal law on retirement income have made their way to the United States Supreme Court.
The nation's highest court heard oral arguments Monday in the consolidated cases of Advocate Health Care Network v. Stapleton, Dignity Health v. Rollins, and Saint Peter's Healthcare System v. Kaplan.
At issue is whether the Employee Retirement Income Security Act, which includes an exemption for churches, also allows church agencies like hospitals an exemption as well.
Get Our Latest News for FREE
An article posted to SCOTUSblog on Tuesday argued that the Justices seemed unwilling to extend ERISA to include church-affiliated hospitals, given the apparent precedent of treating church-affiliated hospitals like churches.
"In a similar vein, several of the justices seemed to find it inequitable to bring the affiliated-organization plans under ERISA given the widespread dissemination of the IRS's view that the plans were exempt," noted SCOTUSblog.
"In the end, then, it seems quite likely that the affiliated organizations will retain their exemptions. The justices ... do not seem likely to reject the IRS's reading of it."
Over the past few years, there have been multiple lawsuits directed at several religiously-affiliated hospitals regarding allegations of underfunding their employee pension plans.
Many of these suits have resulted in settlements in which hospitals have doled out, at times hundreds of millions of dollars to plaintiffs, according to a 2016 article by Bloomberg BNA.
"In May [2016], Connecticut's Saint Francis Hospital agreed to a $107 million settlement, and Trinity Health Corp. reached a $75 million deal with workers in August [2016]," reported Bloomberg.
"Ascension Health settled similar claims for $8 million in 2015, and Alabama's Baptist Health System Inc. reached an $11 million deal with its workers in August after making $89 million worth of voluntary pension contributions, according to court filings."
Last October, Providence Health & Services paid over $350 million in a settlement, making it the largest settlement among cases of this nature.
For the three hospitals whose cases made it to the Supreme Court this session, all of them lost at the circuit court level.
A three-judge panel of the Ninth Circuit ruled against Dignity Health of Californida last July, a three-judge panel of the Seventh Circuit ruled against Advocate Health Care Network of Illinois in March 2016, and a three-judge panel of the Third Circuit ruled against Saint Peter's Healthcare System of New Jersey in December 2015.
"In the decades following the current church plan definition's enactment in 1980, various courts have assumed that entities that are not themselves churches, but have sufficiently strong ties to churches, can establish exempt church plans," observed the Third Circuit panel's decision.
"However, a new wave of litigation, of which this case is a part, has sprung up in the past few years and has presented an argument not previously considered by courts—that the actual words of the church plan definition preclude this result."
