How a Supreme Court decision about pension plans affects religious hospitals

By Matt Hadro

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Credit: sfam_photo/Shutterstock.

The Supreme Court of the United States, in an 8-0 decision on Monday, ruled that the pension plans of religious hospitals meet religious exemptions from costly regulations.

“The Supreme Court got it right,” Eric Rassbach, deputy general counsel at Becket, a legal firm which filed a friend-of-the-court brief on behalf of the Catholic health care networks, stated June 5. “Churches – not government bureaucrats and certainly not ambulance chasers – should decide whether hospitals are part of the church.”

Justice Elena Kagan delivered the opinion of the Court in Advocate Health Care Network v. Stapleton, a consolidation of three cases involving religious hospitals like St. Peter’s HealthCare System in New Jersey and Advocate Health Care Network. Justice Sonia Sotomayor issued a concurring opinion.

Justice Neil Gorsuch, the newest member of the Court, did not join in the ruling as he had not yet been confirmed to the Court when oral arguments in the case took place March 27.

Employees of the health care networks had sued when the institutions tried to have their pension plans, which were regulated for years like the plans of for-profit corporations, re-classified under the religious exemption allowed by federal law, the Earned Retirement Income Security Act of 1974.

This “church plan” exemption meant that the plans would not have to be subject to regulations of the plans of for-profit corporations. One such requirement was that employers have a pension reserve fund of a certain amount.

Requirements like this one, however, would take away resources from religious non-profits that could be spent elsewhere, like helping further the mission of the religious institutions, Becket argued.

Furthermore, it is important to see these religious institutions, which further the mission of churches, as part of churches, Rassbach said.

“It is simple common sense that nuns, soup kitchens, homeless shelters, seminaries, nursing homes, and orphanages are a core part of the church and not an afterthought,” he said.

One of the hospitals, St. Peter’s, is sponsored by the Diocese of Metuchen. Mass is offered at the hospital daily, Catholic devotionals are provided, and some board members are appointed by the local bishop.

Justice Kagan, in the Court’s opinion, explained that under ERISA, not only “church plans,” but also the pension plans of “church-affiliated nonprofits,” were considered to be religiously exempt, “even though not actually administered by a church.”

“The question presented here,” the opinion continued, “is whether a church must have originally established such a plan for it to so qualify. ERISA, we hold, does not impose that requirement.”

This meant that even though churches did not directly set up pension plans of Catholic or Christian hospitals, they could be considered “church plans” if they were maintained by a “principal-purpose organization,” or a religious non-profit.

The U.S. Conference of Catholic Bishops insisted, in a previous amicus brief submitted on behalf of the religious hospitals, that the ministries of the religious hospitals should ensure that they are considered part of churches.

“Indeed, charity has always been a core component of the Catholic Church’s activities, ‘as essential to her as the ministry of the sacraments and preaching of the Gospel’,” the USCCB said, quoting Benedict XVI’s 2005 encyclical Deus caritas est.

This charity is lived out “through myriad Catholic ministries” like health care providers, they added, which should be treated as part of the Church.

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