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Church Plan Exemption Class Action Advances, Court to Determine What Constitutes a ?Ç£Principal Purpose Organization?Ç¥

Last year, the U.S. Supreme Court jointly heard and ruled on a series of long-running, class action lawsuits challenging the church plan status of retirement plans sponsored by certain religiously affiliated healthcare systems. In its opinion, the Supreme Court overturned the lower courts?ÇÖ decisions and held that such plans could qualify as church plans, even if they were not originally established by a church, if the plans were maintained by a church-affiliated organization whose principal purpose is the administration or funding of the plan (view our prior blog post on this Supreme Court opinion). The cases were then remanded back to their original district courts for further proceedings consistent with the Supreme Court?ÇÖs order. One of those federal district courts recently ruled, in partially denying a motion to dismiss, that the plaintiffs had pled enough facts to adequately allege a claim that the Dignity Health retirement plan was not a… Continue Reading

Supreme Court Holds that Church Plan Exemption Applies to Church-Affiliated Hospital Retirement Plans

In an?áeight to?ázero decision, the U.S. Supreme Court held that ERISA?ÇÖs church plan exemption applies to plans maintained by a church-affiliated organization whose principal purpose is the administration or funding of a retirement plan covering employees of a church or a church-affiliated organization (which the Court dubbed principal-purpose organizations), even if the retirement plan was not originally established by a church. Church plans are generally exempt from ERISA, including its fiduciary and minimum funding requirements. Multiple lower courts previously held that the church plan exemption did not apply to the retirement plans of Advocate Healthcare Network, Dignity Health, and St. Peter?ÇÖs Healthcare System, which are church-affiliated healthcare systems, because their plans were not originally established by a church, but rather by the healthcare systems. Applying a plain-text reading of the statute and noting that the federal government had long agreed the exemption applied to such retirement plans, the Supreme Court… Continue Reading

Supreme Court Issues Stay in Pending Church Plan Case

On Wednesday, September 21, the U.S. Supreme Court ordered a stay in the ongoing church plan litigation involving the pension plan of Dignity Health, a healthcare system affiliated with the Catholic Church. Earlier this year, the U.S. Court of Appeals for the Ninth Circuit held that Dignity Health’s pension plan did not qualify as a church plan because it was not established and maintained by a church or a convention or association of churches, but rather by a non-profit organization merely affiliated with a religious organization. Consequently, Dignity Health’s plan would no longer be exempt from ERISA. Dignity Health appealed the Ninth Circuit’s ruling to the U.S. Supreme Court, but the Court has yet to announce whether it will hear that appeal or the appeals filed in two other church plan cases involving the pension plans of Advocate Health Care Network and Saint Peter’s Health System. The Supreme Court’s order… Continue Reading

Ninth Circuit Holds that ?Ç£Church Plan?Ç¥ Must Be Established By a Church or Convention or Association of Churches

The U.S Court of Appeals for the Ninth Circuit affirmed a district court decision that a church plan must be established by a church or by a convention or association of churches in order to be exempt from ERISA as a ?Ç£church plan.?Ç¥ Under the court?ÇÖs interpretation of the church plan exemption, it is not enough that the plan is maintained by a church-controlled or church-affiliated organization whose principal purpose or function is to provide benefits to church employees. The case was remanded to the district court for further proceedings. The opinion in Rollins v. Dignity Health, No. 15-15351 (9th Cir. July 26, 2016) is available?áhere.

Court Allows ERISA Claims to Proceed against Employer?ÇÖs ?Ç£Church?Ç¥ Plan

The U.S. District Court for the Northern District of California held that for a pension plan to be a ?Ç£church plan,?Ç¥ exempt from ERISA?ÇÖs requirements, it must have been established by a church or convention of churches.?á The court reasoned that even though ERISA had been amended to permit a church plan to be ?Ç£maintained?Ç¥ by a church-associated organization, the amendment did not obviate the requirement that the church plan be ?Ç£established?Ç¥ by a church or convention of churches.?á The court declined to defer to the IRS?ÇÖs interpretation, set forth in a series of private letter rulings, on the grounds that those rulings only apply to the persons who request them and are not entitled to judicial deference.?á As a result, the court did not dismiss an employee?ÇÖs claim that the employer?ÇÖs plan was subject to, and not in compliance with, ERISA. Rollins v. Dignity Health, No. C13-1450 TEH (N.D.… Continue Reading

December 2022