Supreme Court agrees to take up church hospitals’ pension dispute

| Carol Zimmermann | December 5, 2016 | 0 Comments

The Supreme Court agreed Dec. 2 to hear arguments about church hospital pension disputes over whether religious hospitals and schools can be exempt from complying with federal laws covering employee pension benefits.

Lower courts have ruled against three hospital systems, two of which are Catholic, that have claimed an exemption from the Employee Retirement Income Security Act of 1974.

The hospital systems have argued that the federal government interprets church pension plan exemptions to include church-affiliated organizations, but workers have argued, and courts have sided with them, that their pensions do not qualify as “church plans” exempt from the law. Billions of dollars in benefits for hospital workers are at stake in the lawsuits.

The cases involve Advocate Health Care of the Chicago area, a merged network of evangelical, Lutheran and United Church of Christ hospitals; and two Catholic networks: St. Peter’s Healthcare System of New Brunswick, New Jersey, and Dignity Health of San Francisco.

Workers have won a number of federal appeals court decisions against church-based hospital systems claiming their pension plans were underfunded. The appeals courts have said religious organizations must comply with the law that govern employee benefits and protects retirement plans.

Appeals filed by the three hospital systems said the employees’ lawsuits “seek billions in retroactive liability and a wholesale upheaval in the administration of pension plans affecting religious employers and employees across the country.”

The hospitals also argue that for 30 years the federal agencies that enforce Internal Revenue Service regulations have interpreted that the language excludes church-affiliated organizations.

Catholic Health World reported in October that if the plaintiffs win, “faith-based providers may be subject to a costly revamp of their employee pension plans and they also may lose ground in their ongoing struggle to maintain their religious exemption in other legal matters.”

In an amicus brief filed Aug. 15 in support of the Catholic hospitals, the Catholic Health Association said the Employee Retirement Income Security Act, amended in 1980, “eliminated the narrow viewpoint that only a brick-and-mortar house of worship may be considered a church” for pension purposes.

The brief also said the appellate courts in two of the cases used too narrow a definition of “church,” which was not the original intent of the legislators.

Approximately 30 lawsuits have been filed in recent years regarding church-related pensions, including about two dozen against Catholic health care providers, many of which have been settled at the district court level while some are still in litigation.

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