Catholic Hospital's Disability Plan Does Not Qualify As A "Church Plan" Exempt From ERISA

In Hanshaw v. Life Insurance Company of North America, (WD KY, Oct. 24, 2014), a Kentucky federal district court held that a long term disability insurance plan offered to its employees by a Catholic hospital is covered by ERISA and does not qualify as an exempt "church plan." The court held that even if it is sufficient to qualify for an exemption that a plan is established and maintained by an organization affiliated with a church rather than by the church itself, ERISA also requires that the organization have as its principal purpose the administration or funding of a benefits plan.  Here the hospital's primary purpose is the provision of health care, not the administration of a benefits plan. Since the plan is covered by ERISA, the court upheld defendant's removal of the case to federal court.