Ministry organizations among defendants
By JULIE MINDA Much is at stake if plaintiffs prevail in a spate of lawsuits that class action law firms have filed over the past several years against faith-based health care providers, according to attorneys for CHA. The suits claim the providers are not "churches" and thus should not be allowed a church-based exemption from the Employee Retirement Income Security Act.
Chopko
CHA in-house and outside counsel told Catholic Health World if the plaintiffs prevail, faith-based providers may be subject to a costly revamp of their employee pension plans and they also may lose ground in their ongoing struggle to maintain their religious exemption in other legal matters.
Mark E. Chopko is CHA's counsel of record in an amicus brief CHA filed Aug. 15 in support of petitions to the Supreme Court to hear appeals in two church plan suits. The cases involve Advocate Health Care Network of the Chicago area and Saint Peter's Healthcare System of New Brunswick, N.J. The systems are asking the Supreme Court to overturn rulings by two federal courts of appeals that their respective plans are not church plans and are thus not exempt from ERISA regulations.
Chopko said the position of the challengers bringing the suits is "that no religious exemption is permissible. None."
Chopko said the plaintiffs' challenges get at the heart of the question: What is "the church?"
"In the Catholic understanding of the term, church is more than a steepled building and always was. Health care is essential and integral to the church's self-understanding of how to minister to a hurting world," he said.
In its amicus brief filed with the Supreme Court, CHA said 1980 amendments to ERISA "eliminated the narrow viewpoint that only a brick-and-mortar house of worship may be considered a church for ERISA purposes." The association said the appellate courts in the Saint Peter's and Advocate cases used a too narrow definition of "church" — one that was not intended by legislators.
CHA's brief holds that religious orders established their ministries as expressions of the church's work; and "having received permission of church authorities, healthcare sponsors are assured that their work is authentically Catholic and will remain so until the church decides otherwise, a point beyond the ability of any secular court to adjudicate. To hold otherwise would both impermissibly invade religious autonomy and jeopardize the Catholic ministries that operate beyond the walls of steepled buildings."
ERISA exemption
The approximately 30 lawsuits that have been filed over the past three-plus years — about two dozen of them against Catholic health care providers — concern the interpretation of a section of the 1974 Employee Retirement Income Security Act as well as the interpretation of amendments Congress made to the act in 1980.
The 1974 act exempts from federal pension regulations church plans, or plans "established and maintained for its employees (or their beneficiaries) by a church." The 1980 amendments extended this exemption to pension plans by organizations "controlled by or associated with a church."
Gilden
Lisa Gilden is CHA vice president and general counsel. She said that as integral parts of the churches that established them, faith-based hospitals have been allowed for more than 30 years to operate their pension plans outside of the ERISA regulations — which require employers to meet certain pension funding levels, provide disclosures and pay for federal premium insurance. Congress created the exemption to avoid unnecessary government entanglement in the financial affairs of churches under the First Amendment. As stated in CHA's Supreme Court amicus brief, "Congress intended a broad and open-ended church plan exemption to ERISA that provided a legitimate accommodation for the concerns of the variety of religious denominational polities in the United States."
IRS confirmation
The amicus brief says that the Internal Revenue Service has repeatedly confirmed the providers' interpretation of the ERISA act and amendments, and the IRS "has maintained this unbroken line (of reasoning) for more than three decades."
Chopko explained that ministries have been writing to the IRS for decades asking for "private letter rulings" that their plans are exempt from ERISA regulations. Since ERISA has tax implications, its administration is for the most part handled by the IRS. The U.S. Department of Labor also is involved to a lesser extent in determining exempt status. Chopko said, "Since 1980, government agencies have issued more than 550 such determinations confirming church plan exemptions for church ministries, like Catholic health care."
Chopko said although this matter was considered settled, it has been coming under question in part because "for-profit businesses are claiming exemption based on religion," and problems associated with religious pension plans outside of Catholic health care.
Spate of litigation
Since about 2013, several class action law firms have been focusing on what Gilden says is "perhaps unartfully drafted legislation" — zeroing in on the language in the act and amendments that defines "church." Often working with a nonprofit organization called the Pension Rights Center, the firms have been soliciting employees of faith-based health care providers to initiate lawsuits against the providers.
Of the approximately 30 lawsuits initiated in the past three years, 26 are currently at — or have terminated at — the district court level. One of the 26 has been dismissed, five have been settled or are in the process of being settled and the remainder at the district court level are currently in litigation. St. Louis-based Ascension and Livonia, Mich.-based Trinity Health are defendants that prevailed at the district court level, but then settled to avoid further litigation. Ascension settled for $8 million in 2015. This year, Trinity Health supported a $107 million settlement on behalf of a newly acquired affiliate in one case and settled for $75 million in a case that had been brought against Catholic Health East. CHE merged with Trinity in 2013. Ascention and Trinity are putting the funds into the pension plans. Ascension and Trinity retain their "church plan" status under the settlement agreements.
At the federal court of appeals level, briefing is now taking place in the 10th circuit in Denver after an appeal of a suit in which the defendant, Catholic Health Initiatives of Englewood, Colo., prevailed at the district court level. The seventh, ninth and third circuit federal courts in Chicago, San Francisco and Philadelphia, respectively, have found for the plaintiffs. The three defendants that lost at the appellate court level — Advocate Health Care; Saint Peter's Healthcare; and Dignity Health of San Francisco — have filed petitions for the Supreme Court to hear their cases. Dignity's filing came after CHA entered its amicus brief.
Gilden said CHA has filed briefs in support of defendants at every level of the court system in the pension suits and it took the unusual step of filing its amicus brief urging the Supreme Court to hear the Advocate or Saint Peter's case because the issues in the litigation are of paramount importance to the ministry.
Chopko said critically important rights are at stake in the cases weaving their way through the court system, some of which may be joined if the Supreme Court takes up the matter. "The importance of these issues and the cases cannot be overstated," he said.
"Given the substantial reliance of religious charities on the IRS and other agencies, which granted them exemption, and the fact that for the first time courts have contradicted what courts and regulators and charities thought was settled law, there is a very good chance the Supreme Court will take this up," Chopko said.
Chopko said if the ERISA exemption is not interpreted as it has been for decades, "it will result in unconstitutional entanglements as the government decides how tied to the church is a particular ministry."