On March 27, 2017, the Supreme Court heard oral argument in Advocate Health Care Network v. Stapleton, which is consolidated with Saint Peter’s Healthcare System v. Kaplan and Dignity Health v. Rollins. The Employee Retirement Income Security Act of 1974 (ERISA) requires that employee retirement plans contain certain safeguards, but exempts “church plan[s]” from these requirements. Under 29 U.S.C. 1002(33)(A), the term “church plan” means “a plan established and maintained… by a church or by a convention or association of churches which is exempt from tax….” After a controversy involving an Internal Revenue Service determination that the church plan exemption did not encompass pension plans established and maintained by two orders of Catholic sisters for the employees of their hospitals, Congress amended the statute to add subsection (C), which provides: “A plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches includes a plan maintained by an organization, whether a civil law corporation or otherwise, the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches.”
Plaintiffs in this case are a group of employees who work for Advocate Health Care Network (Advocate) and are members of Advocate’s retirement plan. Advocate is affiliated with a church, though it is not owned or financially operated by the church. Plaintiffs sued Advocate, arguing that the Advocate retirement plan is subject to ERISA, and therefore, by failing to adhere to ERISA’s requirements, Advocate has breached its fiduciary duty. Defendants moved for summary judgment, but the district court denied the motion because it determined that a plan established and maintained by a church-affiliated organization was not a church plan within the meaning of the statutory language. The U.S. Court of Appeals for the Seventh Circuit affirmed.
The question now before the Supreme Court is whether the Employee Retirement Income Security Act of 1974's church-plan exemption applies so long as a pension plan is maintained by an otherwise-qualifying church-affiliated organization, or whether the exemption applies only if, in addition, a church initially established the plan.
To discuss the case, we have Eric Baxter, who is Senior Counsel of the Becket Fund for Religious Liberty.