Supreme Court to decide if religious hospital pensions are subject to ERISA

[Stan]

Last week the U.S. Supreme Court agreed to hear three cases involving whether the pension plans of religiously affiliated hospital systems are exempt from federal pension funding requirements.

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[Gregory Matthews]

In brief:

The U. S. Supreme Court has agreed to  decide whether or not religiously affiliated hospitals are subject to the provisions of the 1974 Employee Retirement Income Security Act (ERISA).  ERISA requires that employers who have pension plans for their employees must both fund them on the level needed to provide the employees with benefits and in addition to protect their pension plans with an insurance system.  

Since 1983 the IRS has opined that hospitals that were started by religiously affiliated entities are exempt from ERISA.  The result is that such hospital pension plans could potentially be underfunded by hundreds of millions, or even billions of dollars.

Employees of Advocate Health, Dignity Health and St. Peter's Healthcare System have filed litigation in the lower courts over this issue.  The involved hospitals have lost in the Third, Seventh and Ninth Circuit Courts of Appeals.   The USSC has consolidated these cases, but not scheduled a time for the cases to be heard.

It is believed that if such hospitals are required to abide by the provisions of ERISA, they will have to provide hundreds of millions of dollars in extra funding to their pensions plans.

In November,  Adventist Health System Sunbelt Healthcare Corporation, was hit with a lawsuit that was filed in the District Court.  It is alleged by the plaintiffs in that litigation that the involved pension system is underfunded by some $134,000,000.  The plaintiffs ask the court to require that their plan comply with the provisions of ERISA.

It should be noted that the above Adventist Health System alleges that it's pension is properly funded.

It is likely that the Florida case will be placed on hold pending the decision of the USSC on the above litigation.

My personal positon:  1)  Such hospitals should not be ipso facto granted an exemption.  2)  Such hospitals should generally be required to abide by the provisions of ERISA.  3)  I hope that the USSC so rules.