Court Suggests Innovative Interpretation of ERISA "Church Plan" Exemption

A series of cases filed around the country have challenged the treatment of Catholic hospital system pension plans as "church plans" exempt from ERISA. Often challengers are employees who contend that the plans have not been funded in compliance with ERISA or met other ERISA requirements.  The issue has generally been framed as whether it is sufficient that the plans are maintained by the church-affiliated organization that created them, or instead whether the plans must have been established by a "church" for the affiliated medical systems in order to qualify as a "church plan." (See prior posting.)  The statutory language in ERISA is ambiguous.

Now in Medina v. Catholic Health Initiatives, (D CO, Dec. 8, 2015), a Colorado federal district court, while coming down on the side of those courts which have ruled that it is enough that the plan be established and maintained by the affiliated medical system, has also suggested a more direct way to cut the Gordian knot.  It suggests that a Catholic health care system is itself a "church", not just an organization affiliated with a church:

[T]he suggestion that a church is no more than a physical place in which to worship evidences a profound misunderstanding and understatement of the nature of religious devotion and service. At the heart of any church are the religious principles that inform its founding, as animated by the faithful adherents to those principles. Indeed, there would be no need for a house in which to worship if there were no worshipers to gather there. In other words, a church is defined principally by its people – the body of the faithful who profess a similar set of guiding religious principles. Where such people gather to express, in word or deed, the principles and mission of their faith, they are the church.

Under this more resonant definition, the court has little trouble in concluding that CHI is, at the very least, a constituent part of the Catholic Church. 

The court also held that the ERISA church plan exemption does not violate the Establishment Clause. saying "Congress’s expressed purpose in carving out the church plan exemption was precisely to avoid unnecessary entanglement with religion."