Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Aug. 18 — Five religious liberty and health groups are urging the U.S. Supreme Court to decide once and for all whether a hospital pension plan can claim a religious exemption from federal funding requirements and worker protection laws.
The proper treatment of hospital pension plans has sparked dozens of proposed class actions and three high-profile appellate court decisions rebuking the practices of Saint Peter’s Healthcare System, Advocate Health Care Network and Dignity Health. In briefs filed with the Supreme Court on Aug. 12 and 15, five religious liberty and health groups are urging the justices to undo these decisions and definitively rule that church-affiliated hospitals can sponsor “church plans” exempt from the Employee Retirement Income Security Act.Groups Filing Supreme Court Briefs
The cases center on a seemingly banal question of statutory interpretation, but the financial consequences can be enormous. In all, these lawsuits allege that 247,000-plus hospital employees are facing a $3.5 billion shortfall in their pensions because the hospitals haven’t adequately funded the plans.
Even more, the lawsuits could trigger “billions of dollars in penalties” against the hospitals, according to the Church Alliance’s brief.
Several of the briefs emphasize the huge universe of workers that could be affected by a Supreme Court decision on this topic. According to the Thomas More Society’s brief, this issue affects the retirement benefits of “millions of employees across the country who work for nonprofit religious organizations,” including the 750,000 people who work for Catholic hospitals alone.
Further, the groups argue that employees at other organizations, including schools, nursing homes and day care centers, could be affected by a high court ruling. That’s because many of these organizations rely on the same statutory exemption in administering their pension plans.
First Amendment rights are a recurring theme in several briefs, which argue that the appellate court decisions against hospital pension plans infringe on religious liberty. For example, the Church Alliance and the Becket Fund contend that the appellate rulings will adversely affect certain faith-connected entities, particularly Protestant and Jewish ones, more than others, because of how the courts have focused on church organization and structure.
Taking a different approach, the Becket Fund also argues that forcing faith-connected hospitals to comply with federal pension rules could threaten their ability to “invest retirement funds morally” and use pension assets to “promote social justice” and “avoid supporting evils.”
In an unexpected twist, the Church Alliance predicts that denying religious exemptions to hospital pension plans could result in “cascading securities law violations” by forcing the plans into the purview of the Investment Company Act of 1940.
The Supreme Court hasn’t announced whether it will hear the appeals brought by Saint Peter’s and Advocate Health. Recent court filings suggest that Dignity Health also plans to bring this question before the justices.
The cases are Advocate Health Care Network v. Stapleton, U.S., No. 16-74, petition for certiorari filed 7/15/16 and Saint Peter’s Healthcare Sys. v. Kaplan, U.S., No. 16-86, petition for certiorari filed 7/18/16 .
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The Church Alliance’s brief is at http://src.bna.com/hQn. The Thomas More Society’s brief is at http://src.bna.com/hQm. Alliance Defending Freedom’s brief is at http://src.bna.com/hQj. The Catholic Health Association’s brief is at http://src.bna.com/hQl. The Becket Fund’s brief is at http://src.bna.com/hQk.
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