(Corrects paragraph 13 to show justices sent religious rights
case back to lower courts in May but did not deadlock 4-4)
By Brendan Pierson
Dec 2 The U.S. Supreme Court on Friday agreed to
hear appeals by Christian-affiliated hospital systems of lower
court rulings that gave the green light to employee lawsuits
accusing them of wrongly claiming a religious exemption from
federal pension law.
New Jersey-based St. Peter's Healthcare System,
Illinois-based Advocate Health System and California-based
Dignity Health each appealed separate federal appeals courts
rulings that refused to throw out the employee lawsuits. The
justices agreed to hear all three cases.
The employees in effect accuse the hospital systems of being
big businesses posing as church organizations in order to avoid
minimum funding and reporting requirements on employee pension
plans mandated by the federal Employee Retirement Income
Security Act, or ERISA.
The suits state that by claiming the exemption, the hospital
systems are putting employee pension plans at risk. The hospital
systems said allowing the lawsuits to go forward could
jeopardize nonprofit hospitals' ability to provide care.
The three hospital systems maintain that their religious
affiliation makes them exempt from ERISA. St. Peters is
affiliated with the Roman Catholic Church, Dignity is formerly
Catholic-affiliated but still operates many Catholic hospitals,
and Advocate is affiliated with the Evangelical Lutheran Church
in America and United Church of Christ.
Hundreds of hospitals and hospital systems have claimed the
exemption since 1980, when Congress amended ERISA to extend what
is known as the "church plan" exemption, originally only for
churches, more broadly to certain religiously affiliated
In recent years, employees, many represented by the same law
firms, have filed lawsuits challenging hospitals' use of the
Trial court rulings have been mixed. But the 3rd, 7th and
9th U.S. Circuit Courts of Appeals ruled against St. Peter's,
Advocate and Dignity, respectively, refusing to dismiss
employees' lawsuits against them. No other federal appeals
courts have decided cases on the issue.
All three courts found that the plain language of ERISA
allows the exemption only for organizations set up by churches
to manage their employee pension plans, not for wholly separate
entities like hospitals. They rejected hospitals' arguments that
they relied on opinions from the Internal Revenue Service, which
has allowed them to claim the church plan exemption since the
The extent of hospitals' potential liability is not clear,
since church plans are not subject to the reporting requirements
of ERISA. The employees suing St. Peter's and Dignity claim that
their plans are underfunded by about $70 million and $1.2
billion, respectively. Advocate is also accused of underfunding
its plan, though the complaint in that case does not say by how
The hospitals have denied their plans are underfunded.
The plaintiffs are also seeking retroactive penalties for
past violations of ERISA, which the hospitals said could add up
to hundreds of millions or billions of dollars.
In another case involving religion, the Supreme Court in May
avoided making a major ruling by telling lower courts to
reconsider whether nonprofit Christian employers should be
exempt from a federal requirement that they provide female
workers with medical insurance paying for birth control.
(Reporting by Brendan Pierson in New York; Additional reporting
by Lawrence Hurley in Washington; Editing by Alexia Garamfalvi
and Will Dunham)