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The United States Supreme Court Rules in Favor of Hospitals on “Church Plan” ERISA Exemption

The United States Supreme Court unanimously ruled in favor of religiously-affiliated hospitals and healthcare organizations in holding that a pension plan need not be established by a church in order to qualify for ERISA’s church plan exemption. Petitioners are religiously affiliated non-profit healthcare organizations appealing decisions by the Third, Seventh, and Ninth Circuit Courts of Appeal that a church must establish an ERISA-exempt church plan. Respondents are current and former employees of these organizations.

Justice Kagan explained that the plain language of the statutory text clearly supported petitioners’ view that a pension plan need not be established by a church to qualify for the exemption. Rather, a pension plan can qualify as a church plan if it is maintained by an organization whose principal purpose is to administer or fund a benefits plan or program for church employees if the organization is controlled by or associated with a church (“principal purpose organization”) regardless of who established the plan. The Supreme Court’s decision left unresolved several key questions, including whether petitioners and similar organizations are sufficiently church-affiliated to qualify for the exemption and whether these organizations’ benefit committees are principal-purpose organizations. Justice Sotomayor agreed with the decision and its reasoning but she concurred to note her concern about the potential consequences of leaving employees of these organizations unprotected by ERISA. Justice Gorsuch took no part in the decision. The case is Advocate Health Care Network v. Stapleton, No. 16-74 (2017).

© 2019 Proskauer Rose LLP.

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About this Author

Howard Shapiro, Employment Attorney, Proskauer Rose Law FIrm
Partner

Howard Shapiro is a Partner in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center, resident in the New Orleans office. He is a nationally known ERISA litigator, listed by The National Law Journal as one of the Top 40 Benefits Lawyers in the country in the category of litigators representing management. He is ranked in the first tier of ERISA litigators by Chambers USA, which commends him as “a top class national player” with an “excellent practice with both breadth and depth.” He has been listed in The Best Lawyers in America since 1997, where he is one of...

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Stacey Cerrone, Labor and Employment Attorney, Proskauer Rose Law FIrm
Senior Counsel

Stacey C.S. Cerrone is a senior counsel in the Labor & Employment Law Department, where she focuses her practice on ERISA litigation and labor and employment law.

Stacey represents plan sponsors, plans, directed trustees, and fiduciaries in all phases of litigation and mediation involving all aspects of ERISA, including: class actions and individual claims relating to ERISA's fiduciary duty and prohibited transaction provisions; denials of claims for benefits; church plans, severance plans; ERISA Section 510; retiree benefits; ERISA preemption of state law claims; and plan investment losses.

Stacey’s work also includes wage and hour law, handling numerous wage and hour class and collective actions. She also does employment law work including employment discrimination, sex harassment, gender discrimination, race discrimination, national origin discrimination and ADA claims. She also handles traditional labor law matters, including collective bargaining and defending unfair labor practice charges. Stacey is the author of numerous speeches and articles. She is co-editor of the Employee Benefits & Executive Compensation blog and co-chair of and contributor to the “ERISA Preemption and Effect on Other Laws” chapter of the ABA Labor & Employment Section's Employee Benefits Law book and the author of the “When is Preliminary Relief Available” chapter in BNA’s ERISA Litigation book.

504.310.4086