Key issues for oral arguments scheduled at the U.S. Supreme Court on March 27 include what Congress intended in exempting church plans under the Employee Retirement Income Security Act.
Three religiously-affiliated hospitals are seeking reversal of lower court rulings that their pension plans are not church plans because they are not established or maintained by a church.
Church plans don’t have to comply with ERISA, including the requirements to fund the plan and pay Pension Benefit Guaranty Corporation premiums.
Congress amended ERISA in 1980 to state that “a plan established and maintained for its employees…by a church…includes a plan maintained by an organization…controlled by or associated with a church.”
Based on that language, the hospitals argue that a pension plan needn’t be established by a church in order for it to be an exempt church plan.
“Basic tools of statutory interpretation confirm that ERISA exempts plans maintained by church-affiliated organizations, regardless of whether they were established by a church,” said the brief filed by petitioners Advocate Health Care Network, Saint Peter’s Healthcare System and Dignity Health.
On the other hand, the hospital workers argue in their brief that the 1980 amendments resolved a technical problem “between the ‘establish and maintain’ requirement and churches’ practice of having their plans maintained by a pension board.”
“No one asked, and no Member of Congress desired, to allow all church-associated agencies operating in the national economy to exempt themselves from ERISA at will,” it said. “Nor did any later statute somehow indicate that intent.”
Another issue that may emerge in the argument is what deference the court should give to rulings by the Internal Revenue Service and other agencies on the scope of the exemption.
The hospitals’ brief argues that if the court deems the statutory language to be ambiguous, it should defer to three decades’ worth of agency rulings that such plans are exempt church plans under ERISA.
If church plans can only be “established by a church,” federal agencies and courts would have to decide which religious organizations are a “church” and which are not, contrary to congressional intent, the U.S. Conference of Catholic Bishops and other Catholic charitable organizations said in an amicus brief supporting the hospitals.
Conversely, the Pension Rights Center argued that the exemption is meant only for plans established by a church. The relevant section of the law “and research into its legislative history demonstrate conclusively that Congress did not exempt plans established by religiously-affiliated hospitals, schools, and social services agencies from the protections of ERISA,” its brief said.
See related story, Billion-Dollar Church Plan Standoff Heads to Supreme Court, and related story Feds Break Silence, Back Hospitals in Church Pension Battle.
Stay on top of the latest industry trends and news coverage with a free trial to the Benefits Practice Resource Center.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)