Sunday, March 20, 2016

7th Circuit: Hospital System's Retirement Plan Is Not An Exempt "Church Plan"

In Stapleton v. Advocate Health Care Network, (7th Cir., March 17, 2016), the U.S. 7th Circuit Court of Appeals joined the 3rd Circuit (see prior posting) in holding that a retirement plan maintained by a church-affiliated hospital system does not qualify for the "church plan" exemption in ERISA if the plan was not initially established by a church.  Interpreting the language of the ERISA exemption, the court said in part:
Church-affiliated organization employees may participate in the same retirement plans as church employees with no further distinctions. Moreover, churches may have outside organizations maintain their plans. The only requirement is that a church must establish the plan in the first place.
Judge Kane filed a concurring opinion emphasizing that the court's interpretation "does not compel church-affiliated organizations to operate in a way that violates their religious beliefs."  This is one of a series of cases filed around the country challenging religiously-affiliated health care systems' reliance on the church plan exemption for their retirement plans.  In this case, plaintiffs charged that the plans failed to meet the vesting, reporting and funding requirements of ERISA. BNA Pension & Benefits Daily reports on the decision and its implications.