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Supreme Court Holds Church-Affiliated Hospital Pension Plans Qualify as Church Plans

In an 8-0 opinion penned by Justice Kagan, today the United States Supreme Court held a pension plan “maintained by a principal-purpose organization qualifies as a church plan regardless of who established it” and, as such, is exempt from ERISA’s requirements.

Current and former hospital employees filed separate class actions against three church-affiliated non-profits that run hospitals claiming the hospitals’ pension plans do not fall within ERISA’s church-plan exemption because they were not established by a church. The district courts agreed with the employees and held ERISA’s “plain text” requires a pension plan be established by a church to qualify for the church-plan exemption. The Courts of Appeals for the Third, Seventh and Ninth Circuits affirmed. The Supreme Court accepted certiorari.

In overturning the lower courts’ rulings, the Supreme Court spent the majority of its opinion analyzing in great detail the statutory language and the definition of a “church plan.” While the original definition included only a “plan established and maintained . . . by a church or by a convention or association of churches,” a 1980 amendment expanded that definition to include a plan maintained by a “principal-purpose organization.” The Supreme Court also pointed to Congress’ purpose in enacting the 1980 amendment and decades of federal agency decisions that interpreted the ERISA church-plan exemption in reaching its decision. In reversing, Justice Kagan concluded, “[u]nder the best reading of the statute, a plan maintained by a principal-purpose organization therefore qualifies as a ‘church plan,’ regardless of who established it.”

© 2020 Dinsmore & Shohl LLP. All rights reserved.National Law Review, Volume VII, Number 156


About this Author

Jennifer Mitchell, health care practice group partner, Dinsmore Shohl, law firm,

Jennifer is a Partner in the Health Care Practice Group and leads the firm’s HIPAA Privacy and Security practice and initiatives. In her HIPAA practice, she works with clients to minimize the risk of privacy and data security issues, assisting with all aspects of HIPAA privacy and security compliance, governance, audits/investigations, breach analyses, training and strategic planning. She has a thorough understanding of federal and state privacy and confidentiality laws and has served as a health care privacy expert witness. 

Within the...

Jenna Moran, Corporate Attorney, Dinsmore Law Firm

Jenna is a member of the Corporate Department, focusing her practice on health care law. Prior to joining Dinsmore, she served as a judicial extern for Judge Raymond Mitchell in the Circuit Court of Cook County in Chicago. She also worked as a law clerk for Krieg DeVault, LLP in Chicago where she gained experience in regulatory compliance, pharmacy law, Medicare/Medicaid appeals and reimbursement, and health law litigation. Jenna also served as the Symposium Editor for the DePaul Law Review, where she organized the 24th annual DePaul Law Review Symposium bringing together the foremost professionals in mental health law to build effective solutions to improve mental health services. 

James Tweatt, Dinsmore Law Firm, Employment Law Attorney

Jay’s practice is concentrated in the areas of employee benefits and executive compensation for both profit and tax-exempt entities. He advises companies on the design, formation and operation of tax-qualified retirement plans (including cash balance and hybrid plans), nonqualified deferred compensation plans (including Code §§ 409A and 457 compliance), and welfare benefit plans (including compliance with the Affordable Care Act, COBRA, FMLA, and USERRA).

He also has experience with ERISA fiduciary issues, including issues related to plan...