Supreme Court exempts church-affiliated hospitals from federal pension law: 5 things to know

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The U.S. Supreme Court on Monday held that church-affiliated hospitals do not have to comply with the federal Employee Retirement Income Security Act, which governs employee pensions.

Here are five things to know about the case and the high court’s ruling.

1. The Supreme Court agreed in December to take up appeals filed by religiously affiliated hospital systems that were accused of underfunding their employee pension plans.

2. In three lawsuits, which were consolidated into one case, the high court was asked to decide whether the health systems can rely on their church affiliations to avoid complying with ERISA, which requires pension plans to have adequate funding to pay their promised benefits.

3. The lower courts said each of the three hospital systems — Saint Peter’s HealthCare System in New Brunswick, N.J., Dignity Health in San Francisco and Advocate Health Care in Downers Grove, Ill. — misclassified their pensions as “church plans” exempt from ERISA.

4. In an 8-0 ruling issued Monday, the Supreme Court overturned the lower court decisions that could have cost the health systems billions of dollars combined. Supreme Court Justice Neil Gorsuch did not participate in Monday’s decision, as he joined the court after arguments were presented in the case.

5. Justice Elena Kagan, writing for the court, said ERISA’s religious exemption applies to pension plans established by churches themselves and those established by organizations affiliated with churches.

“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,” wrote Ms. Kagan.

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