US Supreme Court to Review ERISA Findings from Appellate Courts


Washington, DC: A court challenge that pits church-based health networks against ERISA provisions and interpretations is to be heard by the highest court in the land, following notification on December 2 that the US Supreme Court is going to weigh in by agreeing to review recent decisions by the appellate courts. As one of the health networks is based in California, the case is expected to have some influence and impact on California ERISA labor law.

At issue is an interpretation of just what a church-affiliated hospital is, and whether or not it has to see affiliation with an actual, brick-and-mortar church in order to qualify for exemptions observed in the Employee Retirement Income Security Act (ERISA).

Amongst three health networks embroiled in the litigation is Dignity Health, headquarterd in California. Dignity has joined with Saint Peter’s Healthcare System, based in New Jersey, and Advocate Healthcare Network, which is based in Illinois.

The California ERISA dispute mirrored by the other two health networks has to do with provisions and fiduciary tenets normally required by ERISA. There are exemptions, however, for faith-based health networks affiliated with a church, whereby the latter – assuming they qualify – do not have to undertake fiduciary obligations and minimum-funding requirements.

What got them here was a putative class action launched by employees who assert their employers are not, in actual or real sense affiliated with a church in the first instance, and thus take exception to any claim by the health networks that they qualify for exemption under that qualification.

Based upon the assertion the church-based hospital(s) are capitalizing on an ERISA exemption for which they don’t correctly qualify, workers are therefore taking the position that their retirement funds have been left vulnerable with the lack of minimum funding requirements, insurance or disclosure should the funds dip beneath a certain plateau.

The health networks are fighting back, contending that any reversal of an exemption would oppose long-standing positions taken by the Internal Revenue Service (IRS), US Department of Labor (DOL) and the Pension Benefit Guaranty Corp.
Billions of dollars’ worth of claims are on the line.

According to documents, the Seventh, Third and Ninth Circuits found that the retirement plans of the three networks cannot be excluded from ERISA as “church plans.”

The health networks appealed their case to the US Supreme Court, which has agreed to review the findings of the lower appellate courts.

Religious freedom groups are defending the faith-based health networks, and their decision to take their ERISA case to the highest court in the land.

To that end the Alliance Defending Freedom group, in a statement following the decision by the high court to review, said that “the government shouldn’t attempt to go into the theology business by assuming it has the ability or expertise to decide whether a faith-based ministry is religious enough to be a ministry.”

The cases are Saint Peter’s Healthcare System et al. v. Laurence Kaplan, Case No. 16-86,  Advocate Health Care Network et al., Case No. 16-74, and Dignity Health et. al. v. Starla Robbins, Case No. 16-258, in the Supreme Court of the United States.

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