Church-Affiliated Hospitals May Be Exempt from Demands of Federal Retirement Income Law

Indexed Universal Life

The United States Supreme Court has decreed that a few church-affiliated hospitals can be exempt from the demands of the federal retirement income law. This decision was taken to ensure better religious freedom but critics believe that this ruling is not in favor of employees who may never get the retirement benefits they deserve and this decision could ruin their financial planning.

retirement benefits

 The Unanimous Decision on Applicability of Demands of Federal Retirement Income Law

The unanimous decision on the applicability of demands of federal retirement income law was taken by the US Supreme Court recently in which it highlighted that a group of three church-affiliated hospitals can be exempted from the demands of a federal retirement income law.

In an 8-0 decision released recently, the high court ruled that church agencies such as hospitals can qualify for the religious exemption in the Employee Retirement Income Security Act. The case regarding the ruling was Advocate Health Care Network et al. v. Stapleton et al.

The case has consolidated three detached lawsuits, Dignity Health v. Rollins, Saint Peter’s Healthcare System v. Kaplan and Advocate Health Care Network v. Stapleton. All these cases involved the hospitals that are losing at the circuit court level.

Authoring the Opinion for the Court

Justice Elena Kagan authored the opinion for the Court regarding federal retirement income law.  Justice Neil Gorsuch was not included in the ruling since he was not involved in the proceedings. Kagan wrote that ERISA provides that a church plan means a plan that is established and maintained by a church is to include a plan maintained by a principal purpose organization.

Under the best reading of the statute, a plan that is maintained by a principal purpose organization, therefore, qualifies as a church plan not considering of who established it. The court opted for reversing the judgments of the Courts of Appeals.

Concurring Opinion

Justice Sonia Sotomayor has written a concurring opinion regarding the decision on federal retirement income law in which she explained that while she agreed with the opinion of the majority, she was still troubled by the result of the ERISA law exemption. She appreciated the court’s opinion by saying that she was persuaded that it correctly interprets the pertinent statutory text. However, she was nevertheless troubled by the outcome of these cases because she thinks such decisions may lead to denial of ERISA’s protections for scores of employees who work for organizations which look and operate similarly to secular businesses.

Multiple Lawsuits

In the last few years, there have been many lawsuits directed at various religiously-affiliated hospitals concerning the accusation of underfunding employee pension plans. As per an article by Bloomberg BNA in 2016, many of these suits resulted in settlements in which the hospitals have provided hundreds of millions of dollars to plaintiffs.

Bloomberg also reported that in May 2016 Connecticut’s Saint Francis Hospital doled out USD 107 million as a settlement. In August 2017, the Trinity Health Corp. made a USD 75 million deal with the workers. Alabama’s Baptist Health System Inc. also offered USD 11 million to its workers in August after making USD 89 million worth of pension contributions. Ascension Health settled claims for USD 8 million in 2015. The last two rulings are as per court filings.

Even in last October, Providence Health & Services had to pay USD 350 million in a settlement. It was the largest settlement in cases of this nature.

Critics’ Opinion

Americans United for Separation of Church and State also echoed the concerns of Sotomayor by releasing the statement regarding the Court rulings. It stated that the hospitals must not be allowed to drain the employee pension funds just because they have a religious affiliation. After all, religious freedom is an elementary American value with pensions and retirement as an elementary part of the American dream.

Appreciating the Court Ruling

The First Liberty Institute has celebrated the high court ruling regarding federal retirement income law as FLI Senior Counsel Justin Butterfield stated that the decision was in line with the country’s history of religious freedom. The ruling of the Supreme Court respects great history and tradition allowing mosques, churches, synagogues and other religious ministries to follow their religious mission without having to deal with the weight of government bureaucracy and regulation hampering their efforts or intruding upon their mission.

Conclusion

It is quite clear that the ruling of the US Supreme Court regarding federal retirement income law has created quite a stir as some people appreciate it while some are criticizing it. However, it is quite clear that the employees working for Church-Affiliated Hospitals might be hit hard by it because they may lose their retirement benefits and their financial planning for retirement may be ruined.

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