WASHINGTON, D.C. – The
U.S. Supreme Court will determine if hospitals with a church
affiliation qualify for a church pension plan or if they must follow
federal laws for pension benefits, a decision that would have a grave
financial impact on hospitals.
30 years, the hospitals at the center of this suit have been told by
the Internal Revenue Service they were exempt under the Employee
Retirement Income Security Act (ERISA) because they are considered
church plans based on their Catholic and Protestant church
affiliations, but now that exemption is being challenged.
employees have brought cases against hospitals for not following
ERISA, which includes expensive safeguards for employee pensions. The
lower courts in the cases of Advocate Healthcare v. Stapleton, St.
Peter's Healthcare v. Kaplan, and Dignity Health v. Rollins ruled
against the hospitals saying to qualify as a church pension plan the
plan must be established by a church. The three cases will be
consolidated for the Supreme Court's review.
religious hospitals have been relying on an interpretation of the law
for more than 30 years,” Kevin Snider, chief counsel for the
Pacific Justice Institute told the Northern California Record. “That interpretation is that a pension plan can be exempt if
maintained or controlled by a church, whether or not a church itself
established the plan.”
This was based on the interpretation by the
IRS, Department of Labor, and the Pension Benefit Guaranty
Health said it is pleased the Supreme Court has taken up its petition
on this issue and says it has complied with the laws.
hold our employees with the highest regard as they are vital to the
mission of our organization,” Dignity Health told the Northern
California Record. “Our commitment is to ensure that our retirees
and beneficiaries receive the benefits they have earned for their
service. We believe we have complied with the law, including
applicable IRS requirements for our retirement plans.”
Supreme Court rules in favor of the former employees, it would throw
out laws the hospitals had relied on and would result in breaches of
contracts, Snider said. The financial impact would be devastating.
ruling would cost billions to the hospitals and will result in
reduction of services, restructuring or bankruptcy,” Snider said.
religious hospitals provide many of the services to the poor who
would not be able to afford care, those with mental disabilities and
victims of abuse in their communities and these are the people most
at risk if the court rules against the hospitals.
greatest harm will be visited on the poor if a religious hospital is
forced to shut its doors,” Snider said. “From a constitutional
standpoint, the implications of an adverse decision are sobering.”
said that before 1980, the IRS determined if a hospital met the
“religious” requirements on a case-by-case basis. The result was
the IRS decided the church exemption should not apply to a ministry
run by two orders of Catholic sisters because they were not
“religious enough” and that caring for the sick was not a church
function, Snider said. When the government gets to decide if a
service is a church function it breaches the wall separating church
and state, he said.
the early centuries, Christians rescued unwanted babies set out to
die of exposure. Moreover, consistent with established Christian
teaching, during the plagues that ravaged Rome, the Christians would
care for the sick. In view of 2,000 years of practice, for any
representative of the government to claim that ministering to the
sick is 'not a function of the church' is comical,” Snider said.
hospitals are seen as having deep pockets and this issue comes down
to money, he said. There have been several dozen lawsuits filed
against hospitals seeking billions of dollars.
court is expected to hear the case in the spring and make a ruling