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Church-sponsored plans

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Tenth Circuit Agrees with District Court That Catholic Health Initiative's Plan Is a 'Church Plan' (PDF)
"[T]he Tenth Circuit directly addressed several key issues left open by the Supreme Court in Advocate Health, including [1] whether an internal plan administrative committee can qualify as a 'principal-purpose organization' that maintains a church plan, [2] what it means to 'maintain' a plan for purposes of the church plan exemption, and [3] whether the church plan exemption is constitutional under the First Amendment's Establishment Clause.... [T]he Tenth Circuit decided each of these issues favorably to CHI and other religiously-affiliated healthcare systems." [Medina v. Catholic Health Initiatives, No. 16-1005 (10th Cir. Dec. 19, 2017)] (Groom Law Group)
Feds Defend Pension Law's Religious Exemption
"[T]he government argued that [ERISA's] 'church plan' provision is constitutional because it has a secular legislative purpose and neither advances nor hinders religion. This is the first time the government has publicly commented on the constitutionality of the exemption in the four years since it's become a controversial issue driving dozens of ERISA class actions." [Sanzone v. Mercy Health, No. 16-923 (E.D. Mo., gov't memo filed Dec. 11, 2017) (Bloomberg BNA)
Supreme Court Broadly Interprets Scope of ERISA's Church Plan Exemption (PDF)
"As the Court itself noted, the decision does not address other issues raised by the employees, such as whether the hospitals even 'have the needed [degree of] association with a church' to invoke application of the exemption at all. Instead, technically, the decision only resolves the question of whether those hospitals can rely on the exemption regardless of who established their pension plans in the first place." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 5, 2017)] (The Wagner Law Group, via Plan Consultant)
Church Retirement Plans and Retired Ministers May Be Impacted by District Court's Housing Allowance Ruling
"On Oct. 6, 2017, ... Judge Barbara Crabb of the Western District of Wisconsin held that Section 107(2) of the Internal Revenue Code violates the Establishment Clause of the First Amendment. Code Section 107(2) provides that a minister can exclude from gross income a cash housing allowance provided to the minister as pay for services in the exercise of ministry. The ruling, if upheld, would have a significant impact on ministers who have a portion of their salaries designated as housing allowance, as well as their employing churches. Moreover, it would have a significant impact on church retirement plans and retired ministers who designate a portion of their retirement income as housing allowance excludible from taxable income."[Gaylor v. Mnuchin, No. 16-215 (W.D. Wis. Oct. 6, 2017)] (Ice Miller LLP)
St. Joseph's Healthcare Settles Challenge to Church Plan Status
"The agreement calls for St. Joseph to contribute $42.5 million within 60 days. If funding becomes insufficient to pay benefits over the next seven years, St. Joseph's must guarantee to ensure that all accrued benefits are paid. Those benefits are protected for seven years if the plan is amended or terminated, or if it is merged with another plan. Plan amendments call for the plan to be closed by Dec. 31, 2018." (Pensions & Investments)
St. Joseph's Nurses Get Initial OK for $42M ERISA Settlement
"Nurses with New Jersey's St. Joseph's Healthcare System won preliminary court approval for a $42 million settlement of claims that the system underfunded their pension plan -- a deal that was reached after the U.S. Supreme Court said church-affiliated entities are exempt from [ERISA]." (Cohen Milstein Sellers & Toll, via Trial)
[Guidance Overview] A Primer on Church Retirement Plans (PDF)
10 pages. "[This article] provides a general description of church plan status, notes issues affecting church retirement plans, and discusses special rules applicable to these plans under the Internal Revenue Code and [ERISA]." (Ice Miller LLP, via Thomson Reuters Practical Law)
[Guidance Overview] Comparison of Retirement Programs Available to Church and Church-Related Employers (PDF)
13 pages. "This chart compares retirement programs that are 'tax-qualified' under the Internal Revenue Code. In addition to these options, a non-qualified church controlled employer (non-QCCO) can establish a Code Section 457(f) ineligible deferred compensation plan. A church or qualified church controlled organization (QCCO) cannot establish a 457(f) plan, but can establish a non-qualified deferred compensation plan under Code Sections 451 and 83. This chart covers the general rules that apply to each of these types of retirement programs to provide context. However, the rules that apply only to church and church-related employers are bolded in red." (Ice Miller LLP)
Ascension Health Grants $29.5M Backstop for Wheaton Pension
"Ascension Health will guarantee $29.5 million in benefit payments under Wheaton Franciscan Services Inc.'s pension plan, ending a lawsuit accusing Wheaton of wrongly treating the plan as a 'church plan' exempt from federal law ... The deal, announced in court papers filed Sept. 1, requires Ascension to guarantee payment of the first $29.5 million paid out under the Wheaton pension plan in the event the plan can't cover the payments itself. Ascension, which acquired part of Wheaton's health-care business in 2016, also agreed to provide plan participants with annual notices of the plan's funding levels." [In re Wheaton Franciscan ERISA Litig., No. 16-4232 (N.D. Ill. motion for preliminary settlement approval filed 9/1/17 ] (Bloomberg BNA)
Diocese Failed to Make Contributions to Hospital Employees' Pension Fund for Years
"While records are incomplete, it is clear that between 2008 and time of the sale of the hospital in 2014, the Diocese repeatedly underfunded retirement payments or made no payment ... It is unclear how many years before 2008 the failure to make payments and partial payments goes back.... The bankruptcy of the pension fund impacts 2,800 and is the largest failure in Rhode Island history. The pension fund has a deficit of more than $160 million." (GoLocalProv)
Rhode Island Hospital Pension Seeks OK for 40 Percent Benefit Cuts
"St. Joseph Health Services of Rhode Island Retirement Plan on Aug. 18 asked a Rhode Island Superior Court judge for permission to enter receivership, which it says would allow for a 'long-term wind-down' of the plan. The plan -- which was 90 percent funded when the hospital was sold to California-based Prospect Medical Holdings Inc. in 2014 -- now has a deficit of more than $43 million and could become insolvent as early as 2026, according to the [123-page] receivership petition filed with the court.... The decision to seek receivership was driven in part by St. Joseph's belief that the pension plan would lose 'church plan' status on or before Dec. 31, 2018, the petition says." (Bloomberg BNA)
Pension Fund for Hospital Nurses Placed in Receivership
"The [DB] plan for nurses at Our Lady of Fatima Hospital and the former St. Joseph's Hospital was placed in temporary receivership last week after fund actuaries said it faced insolvency just three years after the hospitals were sold to a California-based for-profit company. The plan is 'severely underfunded and requires additional capital of over $43 million to reach a 100-percent funding level,' St. Joseph Health Services of Rhode Island Inc. wrote in a petition asking the court to appoint a receiver and approve a 40-percent across the board reduction in benefits to pension recipients.... According to the receivership petition, the plan is expected to lose religious exemption and begin owing PBGC premium payments in 2018." (Providence Journal)
Supreme Court Church Plan Ruling May Bring Wider Interpretation in the Future
"This ruling significantly weakens the retirement security of participants in benefits plans managed by religiously affiliated health-care organizations.... However, the ruling does have a perversely beneficial effect for the same group of employees. Insured health, disability and life programs administered by the same organizations that have been exempted from ERISA as church plans will regain the protection of state laws that protect consumers, including the right to sue for damages and penalties for bad faith claim handling." (DeBofsky, Sherman & Casciari, PC)
Another Question is Answered in the Who's the Employer Q&A Column
"Which employers can sponsor a 'church plan,' and which employees can such a plan cover?" (S. Derrin Watson, on BenefitsLink)
Hospitals' Supreme Court Victory Leaves Unresolved Questions for Church Plan Sponsors
"The Supreme Court did not address two important additional questions related to the church plan analysis. These questions will almost certainly be litigated by future plaintiffs against church-related organizations that establish and maintain church plans. The Court also did not decide the case on constitutional grounds, leaving open the opportunity for plaintiffs' counsel to continue to make the argument that the church plan exemption from ERISA is itself unconstitutional under the First Amendment's Establishment Clause." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Ice Miller LLP)
Supreme Court's Church Plan Decision Restores Order (PDF)
"In a concise and clearly written opinion, Justice Elena Kagan restored order in the church plan universe -- and validated nearly 40 years of administrative decisions by the [IRS], the [DOL] and the [PBGC] -- by explicitly affirming that church-affiliated hospitals and other organizations can establish benefit plans that should be accorded the same treatment as plans actually established by a church. [The] decision completely shut down the primary line of argument pursued by plaintiffs in a series of class action lawsuits." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Arthur J. Gallagher & Co.)
Supreme Court Decision Offers Some Relief to Church-Affiliated Nonprofits Using ERISA Church Plan Exemption
"[C]hurch affiliates relying on the principal-purpose organization basis to classify their plans as church plans should review their plan governance structure to ensure that they can show that their plans are maintained by an organization that is controlled by or associated with a church and that has the principal purpose of overseeing employee benefit plans of churches or church affiliates. Control of a principal-purpose organization by a church can be shown by a church's control over the appointment of the organization's manager or majority of board members. Association with a church is a subjective analysis that considers whether the organization shares common religious bonds and conventions with that church." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Ford & Harrison LLP)
New Questions for Church-Affiliated Organizations After Supreme Court Addresses ERISA Church Plan Exemption
"Although Stapleton provides church-affiliated organizations with more freedom from ERISA's requirements, the decision raises new questions: What organizations are sufficiently church-affiliated to qualify as principal-purpose organizations for the exemption? ... Will plaintiffs pursue alternative state-law claims against church plan? ... Will Congress take action to narrow the church-plan exemption?" [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Lane Powell PC)
Another Question is Answered in the Who's the Employer Q&A Column
"What's the significance of the recent Supreme Court decision on church plans?" (S. Derrin Watson, on BenefitsLink)
Moody's: Supreme Court Ruling on 'Church Plans' Positive for Faith-Based Hospitals
"A note from Moody's Investors Service says faith-based healthcare organizations will benefit from a recent Supreme Court ruling that deems 'church plans' are exempt from [ERISA's] minimum funding requirements." (HealthLeaders Media)
Supreme Court Ruling Ends the Battle But Not the War: What Church-Affiliated Church Plan Sponsors Need to Know and Do Now
"To prepare for the next wave of such church plan exemption challenges, non-church organizations that sponsor church plans should thoroughly review the legal structure and operation of the entity that maintains the plan to ensure it is a 'principal-purpose organization'.... [T]he Third and Seventh Circuit Courts of Appeals [had] expressed serious doubt as to whether the defendant hospitals' principal purpose of providing healthcare satisfied the principal purpose test." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Bradley Arant Boult Cummings LLP)
Highest Court Recognizes Highest Power: Church-Owned Businesses Secure Supreme Court Win (PDF)
"[T]he Supreme Court has overturned decisions at both district and appellate levels and from the Third, Seventh, and Ninth circuits, which had taken a seemingly rogue view that ERISA's plain text required that a church be the sponsor of the plan for the plan to qualify for the church plan exemption.... For churches and their affiliates, this legal victory essentially means things return to the status quo of the past 30 years. But it is important that church plan sponsors do not mistake 'exempt from ERISA' for 'absolved of fiduciary responsibility.' " [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Lockton)
ERISA 'Church Plan' Exemption Applies to Religiously Affiliated Hospital Plans
"Nonprofit religious organizations who have relied upon the church plan exemption can take some comfort from the Advocate Health Care Network decision, but they still must assess: whether they can establish 'principal-purpose organization' status; whether maintaining a church-plan exemption is worth the litigation risk; and whether complying with ERISA requirements is an acceptable alternative." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (McGuireWoods LLP)
Church Plan Sponsors Should Take Action to Shore Up Exemption
"Any church-affiliated organization that has not established a formal governance structure for plans that it intends to treat as church plans should do so.... A church-affiliated employer that has already established a formal governance structure for its church plans may wish to consider a 'rebranding' ... of its plan administrative committee in a way that would help support the current and historic status of such committee as a principal-purpose organization.... Finally, any plan that is intended to be maintained as a church plan should be reviewed, and amended if necessary, to assure that it does not contain terms and provisions that invoke ERISA." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Verrill Dana LLP)
Church-Affiliated Hospitals Fall Within ERISA's Church Plan Exemption
"Justice Sonia Sotomayor wrote a separate concurring opinion to express her concern over the possibility that the Court's decision could cause many employees who work for organizations that act and operate like secular businesses to be denied ERISA's protections. She invited Congress to correct the result because these 'organizations bear little resemblance' to those Congress considered when enacting the amendment." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Eversheds Sutherland)
Supreme Court Interprets 'Church Plan' Exemption in Favor of Religious Charities
"The next chapter may turn upon challenges to whether a hospital is 'religious' enough to qualify for the exemption. Such arguments will invite inquiries into the steps that churches have taken to maintain the religious mission of their affiliated hospitals, buttressed by the protections of the First Amendment that prevent civil government from intruding upon religious rights of autonomy and self-governance or favoring one form of religious structure over another." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Stradley Ronon)
Supreme Court Finds 'Church Plans' Need Not Be Established by Churches (PDF)
"The Supreme Court's decision unquestionably is a significant victory for religiously-affiliated non-profits and their pension plans. The Court resolved the threshold statutory interpretation question in their favor, holding that their plans can qualify as church plans exempt from ERISA's requirements. The Court's opinion, however, leaves several issues concerning the church plan definition unresolved." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Groom Law Group)
Supreme Court: 'Church Plans' Include Those Established by Church-Affiliated Organizations
"The Supreme Court decision averts what would have potentially been a cataclysmic result to many faith-based hospitals, nursing homes and schools that were counting on being exempt from having their retirement plans subject to the requirements of ERISA. However, some questions remain, because the court did not address the question of the scope of the definition of a 'church-affiliated organization' (or the technical term used in the statute), which could also have an impact on which organizations may operate an ERISA-exempt church plan.... Congress may still ultimately have the last word." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (McDonald Hopkins)
Unanimous Supreme Court Decision in Favor of 'Church Plan' Defendants But Is More Litigation Coming?
"Although this decision is positive news for church plans, it may not be the end of the church plan litigation. Numerous, large settlements have occurred before and since the Supreme Court took up the consolidated cases ... [S]ome will still settle, albeit likely for lower numbers. In addition, Plaintiffs could still push forward with the cases on the grounds that the entities maintaining the church plans are not 'principal-purpose organizations' controlled by 'a church.' " [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Jackson Lewis P.C.)
Church-Affiliated Employers Get Win As SCOTUS Clarifies ERISA Exemption
"The opinion also analyzes the difference between the terms 'establish' and 'maintain' in the context of ERISA plans, concluding that the terms are often used interchangeably. In terms of compliance with ERISA's regulatory scheme, the Court said, it is of more significance which entity maintains a plan than who originally established the plan." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Fisher Phillips)
Supreme Court's 'Church Plan' Decision Leaves Key Issue Undecided
"[T]he Court noted that its ruling did not address a second requirement of the law, that an exempt church plan be maintained by an 'organization' that has administration of the plan as its principal purpose.... In its opinion, the Court noted that this issue and a second issue were not before it, and nothing said in the opinion 'expresses a view of how they should be resolved.' The retirement security of hundreds of thousands of current and former employees of religiously-affiliated hospitals, schools, and social services agencies remains in limbo until these issues are addressed." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Pension Rights Center)
Supreme Court Unanimously Upholds ERISA Exemption for Church-Affiliated Pension Plans
"[T]he employees needed to persuade the justices that waiving the establishment requirement for affiliate-maintained plans was not simply odd ... but so bizarre that the justices should walk away from a straightforward reading of the language.... Although Justice Sonia Sotomayor joined Kagan's opinion ... she pointedly notes that 'organizations such as petitioners operate for-profit subsidiaries, employ thousands of employees, earn billions of dollars in revenue, and compete in the secular market with companies that must bear the cost of complying with ERISA.... This current reality might prompt Congress to take a different path.' " [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (SCOTUSblog)
Text of Supreme Court Opinion: DB Plan of Church-Affiliated Organization is 'Church Plan' Regardless of Who Established It (PDF)
21 pages; unanimous opinion. "That use of the word 'include' is not literal, but tells readers that a different type of plan should receive the same treatment (i.e., an exemption) as the type described in the old definition. In other words, because Congress deemed the category of plans 'established and maintained by a church' to 'include' plans 'maintained by' principal-purpose organizations, those plans -- and all those plans -- are exempt from ERISA's requirements.... Both parties' accounts of Congress's purpose in enacting sub-paragraph (C)(i) tend to confirm this Court's reading that plans maintained by principal-purpose organizations are eligible for the church-plan exemption, whatever their origins." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)] (Supreme Court of the United States)
Bon Secours Agrees to $98 Million Settlement in Church Pension Funding Suit
"The deal, announced in court papers filed May 31, requires the hospital to contribute $98 million to its pension plans over a seven-year period. This payment represents the 'total amount' of plan underfunding at the time of the settlement, according to the filing. The hospital also agreed to pay $300,000 to 530 employees who would have received additional benefits had the hospital used a pension-vesting schedule that complied with [ERISA]." (Bloomberg BNA)
Another Health System Settles Church Plan Challenge
"A preliminary settlement has been reached in a case challenging the 'church plan' status of pension plans for Franciscan Missionaries of Our Lady Health System.... According to the settlement agreement, Franciscan will contribute $125 million to the plans in the next five years, pay $450 to each of the more than 2,000 participants of the plans who accepted a lump-sum buyout of their balance in 2016, and guarantee participants will be paid the pension benefits they were promised for the next 15 years." (planadviser)
In Absence of Help from Archdiocese, New Jersey Hospital Pensioners Put Faith in U.S. Supreme Court
"While adversaries argued in front of the U.S. Supreme Court last week, 79 people who once worked at St. James Hospital in Newark watched the clock.... Their pension fund would go belly up in less than a month.... They would lose retirement income that was promised for a lifetime. And no one is taking responsibility. But the case being decided by the highest court in the land could give new hope to the pensioners[.]" (
[Opinion] Notes (and a Prediction) on the Supreme Court Argument on Church Plans
"As the current litigation over the scope of the church plan exemption has demonstrated, the original assumption that the exemption should be broadly applied has a questionable foundation, and was not founded on the type of rigorous, extensive research and analysis we would normally assume underlies a significant act of statutory interpretation. And this, as much as any other reason, is why we are in the middle of very contentious and financially significant class action litigation over the scope of the church plan exemption, which has now landed in the Supreme Court." (Stephen Rosenberg, The Wagner Law Group)
Audio of Supreme Court Oral Argument in Consolidated Church Plan Cases
Available in MP3, Windows Media and RealAudio formats. [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)] (Supreme Court of the United States)
Supreme Court Hears Church Plan Consolidated Cases
"At first, Justices Sotomayor and Kagan both seemed hostile to the Defendants' view of the construction of the church-plan exemption. But this view seemed to change during the Plaintiffs' presentation.... Justices Alito and Kennedy seemed to focus on church-plan sponsors' long-standing reliance on the IRS/PBGC interpretations of the exemption.... Justice Kennedy also seemed concerned that hundreds of plans had sought and obtained the blessing of the IRS and/or PBGC, and could still face liability 30 years later. Chief Justice Roberts appeared to align with this view, asking Plaintiffs' counsel why those agencies took a view opposite to Plaintiffs' interpretation." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)] (Jackson Lewis P.C.)
[Opinion] Pensions at the Supreme Court: Church Plans
"[T]here's a reason it was never brought up legally before now. It's because now, many of these pensions are bankrupt.... [W]hile the Justices make comments about the expense of all this, that really should be irrelevant re: the law.... There can be bad law and bad legal interpretation. But there's a problem if they undercut the IRS letters. Because tax policy is a huge part of the controlling bureaucracy of the federal government, and if the IRS letters do not hold, then that calls into question all sorts of regulatory actions." (STUMP)
Hospital Pension Plans Seek Relief in Supreme Court
"The oral arguments at the U.S. Supreme Court over the ability of religiously affiliated hospitals to treat their pension plans as 'church plans' amounted to a 60-minute catechism on statutory interpretation and legislative history ... Despite lurking questions of agency deference and church-state entanglement, the justices and attorneys on March 27 stuck closely to the question presented by the cases: Must a benefit plan be initially established by a church to qualify as a 'church plan' exempt from [ERISA]?" [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)] (Bloomberg BNA)
Justices Seem Hesitant About Extending ERISA to Church-Affiliated Pension Plans
"By the end of the argument, several of the justices seemed to coalesce around a likely outcome, reflecting an unwillingness to extend ERISA to cover plans that have been treated as exempt by the [IRS] and other federal agencies for 30 years. As a textual matter, each party's position has an obvious weakness, and the justices explored those weaknesses when questioning the advocates." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)] (SCOTUSblog)
Transcript of Supreme Court Oral Argument in Consolidated 'Church Plan' Appeals (PDF)
74 pages. From opening statement by counsel for petitioners: "Pension plans for religious non-profits have been exempt from ERISA for over 30 years, whether or not a church established the plan. And the contrary holding of the three courts below should be reversed for three reasons. First, the text does not require a church to establish benefit plans for someone else's employees. Second, the government's consistent view, over three decades, has generated enormous reliance interest and warrants deference. And third, affirmance would resurrect the precise problems that everyone understood the 1980 amendment would fix." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)] (Supreme Court of the United States)
Religious Exemption Confounds High Court
"The justices of the Supreme Court struggled to divine meaning Monday from the omission of two words in a revised law that says religious groups need not face federal employee benefit regulations. Complicating the issue is that a church may be directly involved in the creation and maintenance of a plan, or -- in the case of a church-affiliated hospital, for example -- it may have nothing to do with it." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)] (Courthouse News Service)
Oral Argument March 27 on Definition of 'Church Plan' -- What Issues Are in Play?
"[One] issue that may emerge in the argument is what deference the court should give to rulings by the [IRS] and other agencies on the scope of the exemption. The hospitals' brief argues that if the court deems the statutory language to be ambiguous, it should defer to three decades' worth of agency rulings that such plans are exempt church plans under ERISA." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (oral argument in consolidated cases sched. Mar. 27, 2017)] (Bloomberg BNA)
Can Smaller Plan Sponsors Dream Big? Yes! A Case Study
"Recordkeeping fees were cut in half and a new best-in-class investment menu with a low cost index tier was implemented, along with transparent, direct-billed participant fees to replace revenue sharing (a unique arrangement for a 403(b) plan of this size). How did a plan sponsor such the size of [the Anglican Church in North America] accomplish so much and so quickly?" (Cammack Retirement Group)
Supreme Court to Consider Application of ERISA to Church-Affiliated Pension Plans
"The obvious problem with [the employers'] argument is the odd line it draws between plans that are exempt and those that are not exempt.... [W]hy would Congress insist that pure-church plans be both established and maintained by religious organizations while church-affiliated plans need only be maintained by religious organizations? ... [The employees] suggest that the 1980 amendments should be viewed as limited to relaxing the requirement that they address by providing that church-affiliated plans, like church plans, must be 'established' by the 'church' itself, but that they will retain their exempt status whether they are 'maintained' by the church itself or by the affiliate." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (oral argument in consolidated cases sched. Mar. 27, 2017)] (SCOTUSblog)
Another ERISA Church Plan Class Action Settles
"The parties' settlement provides for a settlement amount of approximately $9 million, which would consist of $4 million paid by Defendants into an escrow account ... as well as approximately $5 million in Plan assets held in trust that have not yet been distributed.... Defendants anticipate that approximately $8.4 million will be available for distribution to Plan participants. After final distribution of the settlement amount the Plan will be fully liquidated and formally terminated." [Butler v. Holy Cross Hospital, No. 16-5907 (N.D. Ill. settlement agreement filed Mar. 1, 2017)] (National Law Review)
University's Links to Catholic Church Not Sufficient to Exempt Its Disability Plan From ERISA
"For many years, most courts (and the DOL and IRS) treated plans maintained by church-affiliated organizations as church plans even if they were not established by a church; the narrower reading embraced by the appellate courts ... is a relatively recent development. In March, the U.S. Supreme Court is scheduled to hear arguments on this issue (in those cases), and a decision is expected before the current term ends in June. While those cases all involve pension plans, health and welfare plans like the disability plan here are likely to be affected by the Court's decision." [Durham v. Prudential Life Ins. Co. of America, No. 16-8202 (C.D. Cal. Feb. 10, 2017)] (Thomson Reuters / EBIA)
Church Plan Cases: Federal Agencies Finally Speak
"The [amicus curiae brief of the U.S. Solicitor General with contributions by counsel at PBGC, DOL, IRS and Treasury] presents four arguments urging the High Court to read ERISA's church plan exemption to apply to employee benefits plans of religiously affiliated employers notwithstanding that the plans initially may not have been established by a church.... [1] 'Natural reading' ... [2] Context, history, and purpose ... [3] Consistent and long term application ... [4] No sound reason for radical re-interpretation." (Jackson Lewis P.C.)
[Opinion] Church Plan Crisis Looming
"Why are these government agencies so anxious to keep these 'church' plans exempt from ERISA? Because they might be the worst funded Defined Benefit plans in the country and ... the only place these church plan liabilities appear is in Schedule D, Part X of the sponsor's 990 form. Without any funding requirement many of these plans may already be in pay-as-you-go mode with massive unfunded liabilities that would stretch the resources of government agencies that could be charged with overseeing their solvency." (Burypensions)
Feds Break Silence, Back Hospitals in Battle Over Church Plan Status
"Five federal agencies have asked the U.S. Supreme Court to rule that religiously affiliated hospitals can run pension plans exempt from federal law ... If the Supreme Court rules that these pension plans are subject to ERISA after being run as ERISA-exempt for years, the agencies charged with pension oversight will need to be on the same page in formulating a response ... This coordinated amicus brief suggests that those conversations already may be underway ... The brief is noteworthy for being a rare example of the DOL supporting an employer in a dispute over workers' pension benefits." (Bloomberg BNA)
Text of Amicus Brief of U.S. to Supreme Court on Definition of Church Plan (PDF)
67 pages. "[T]he agencies responsible for administering ERISA's complex regulatory scheme have consistently concluded that such a plan need not be initially established by a church to qualify as exempt. That longstanding interpretation is correct. [1] The agencies' interpretation is the natural reading of the statutory text.... [2] The context, history, and purpose of the MPPAA amendments reinforce the natural reading of the text.... [3] If there were any doubt about the best interpretation of the church-plan definition, it would be resolved by the position adopted and consistently applied by the IRS, DOL, and PBGC.... [4] Neither respondents nor the courts of appeals identified any sound reason to upset decades of reliance interests by imposing a requirement that a church plan be initially 'established' by a church." [Dignity Health v. Rollins, No. 16-258 (cert. pet. granted Dec. 3, 2016)] (U.S. Department of Labor [DOL]; Pension Benefit Guaranty Corporation [PBGC]; U.S. Department of the Treasury; and U.S. Department of Justice)
Supreme Court to Rule on Church Plan Status, Possibly Affecting Welfare Benefits and DC Plans
"What the Court must determine is whether the exemption applies if a plan is maintained by a (tax exempt) church-affiliated organization or is available only when a church, per se, established the plan.... While the plans at issue in these consolidated cases are defined benefit pension plans, the question of whether ERISA applies is much broader, as it has implications for defined contribution retirement plans, welfare benefit plans, and even for health care continuation obligations under COBRA, which similarly exempts church plans." (Fox Rothschild LLP)
Brief of Hospitals to Supreme Court in Consolidated Church Plan Cases (PDF)
79 pages. "Nothing in the statute requires 'churches' to establish pension plans for affiliated organizations; to the contrary, the text is incompatible with such a requirement.... Nothing in ERISA's history supports such a requirement. And such a requirement would serve no apparent purpose, beyond arbitrarily excluding certain plans maintained by religious organizations. It is entirely unclear what church establishment even means and if it is anything more than an empty formalism." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (on appeal to Supreme Court)] (SCOTUSblog)
Fate of Hospital Pensions Rests with Supreme Court (PDF)
"If the Supreme Court agrees with the hospital workers -- as three appellate courts did -- and finds that an ERISA-exempt church plan must be established by a church, then what? That's where things get tricky. In many cases, the workers have sought court orders requiring the hospitals to make up pension funding shortfalls that average about $325 million. They've also sought statutory penalties for decades worth of alleged ERISA violations." (Keightley & Ashner LLP)
Schenectady Hospital Retirees Wonder Who Will Pay After 'Church Plan' Fails
"The pension plan covering workers at the former St. Clare's Hospital has notified more than 1,100 participants that, based on current projections, it will run out of money to pay their retirement benefits in about another decade.... Three cases involving similar pension situations at religiously-affiliated health care organizations are headed to the U.S. Supreme Court this spring[.]" (The Daily Gazette)
Supreme Court's Docket Includes Church Plan ERISA Exemption Cases (PDF)
"A three-year litigation push involved more than two dozen religiously affiliated hospitals. The lawsuits claim more than 300,000 hospital workers face a pension shortfall of about $4 billion because hospitals have wrongly designated their pension plans as exempt.... The court's decision will affect about 30 pending lawsuits against hospitals with similar pension plans." (Bloomberg Law Pension & Benefits Reporter)
Puerto Rico Catholic School Teachers Win Round in Pension Suit
"The main issue in the case is whether the Catholic schools' pension plan is subject to [ERISA] or exempt from the federal law as a church plan.... [The federal district magistrate judge], in his report and recommendation, relied on three cases by the U.S. court of appeals for the Third, Seventh and Ninth circuits. Those cases, and dozens of others pending in federal courts throughout the U.S., have challenged hospitals that treat their pension plans as church plans. The Puerto Rico lawsuit appears to be the only one that challenges a school system using ERISA's church plan exemption." (Bloomberg BNA)
Looking Back at ERISA Litigation in 2016
"Church plans go to the Supreme Court ... Elite universities get the excessive fee treatment ... The [DOL] fiduciary rule litigation ... 'Stock drop' litigation after Dudenhoeffer ... Continued litigation over 401(k) plans." (Stephen Rosenberg, The Wagner Law Group)

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