Supreme Court Rules in Favor of Church-Affiliated Hospitals in Pension Dispute Case

On June 5, the unanimous Supreme Court ruled that church-affiliated hospitals are exempt from complying with the Employee Retirement Security Act (ERISA), a federal law that sets minimum standards for retirement, health and other benefit plans for the protection of employees and employers.

The Supreme Court’s 8-to-0 ruling overturned an appeals court decision, saying that “the 1980 amendment did not intend for religious nonprofits to be considered a ‘church plan,’” making them exempt from ERISA’s strict requirements,” according to The Washington Times.

The pension dispute included three class-action lawsuits against the following organizations: Advocate Health Care Network vs. Stapleton, Saint Peter’s Healthcare System vs. Kaplan and Dignity Health vs. Rollins.

Elena Kagan delivered the opinion of the court and was joined by all other members except Neil Gorsuch, who did not take any part of in the consideration or decision of these cases, as stated in the class-action lawsuit.

“ERISA provides (1) that a ‘church plan’ means a ‘plan established and maintained . . . by a church’ and (2) that a ‘plan established and maintained . . . by a church’ is to ‘include a plan maintained by’ a principal-purpose organization. Under the best reading of the statute, a plan maintained by a principal-purpose organization, therefore, qualifies as a ‘church plan,’ regardless of who established it. We accordingly reverse the judgments of the Courts of Appeals.

It is so ordered.” — Justice Elena Kagan

While this ruling will save a number of religious hospitals from spending money for funding their pension systems, this will ultimately affect these employees from reaping the same benefits of employees from other businesses and institutions, the Chicago Tribune said.

"The Court's ruling sets a precedent for the dozens of other cases being heard at varying jurisdictions throughout the country. We agree with the Supreme Court's decisive interpretation of the law and will continue to operate our plan in the best interest of our associates to ensure they have a successful transition to retirement." — The Advocate Health Care Network

Karen Handorf, attorney for the employees, labeled this outcome as “disappointing” and stated that the church plan exemption will be claimed when appropriate.

If the Supreme Court had not ruled in favor of religious hospitals, Advocate, Saint Peters and Dignity could have faced a “$4 billion shortfall in their pension funding,” Crain's Chicago Business attributed to a client alert from the law firm Mayer Brown.