In one of five major class-action lawsuits challenging church-affiliated sponsors of defined benefit plans, a federal judge ruled Tuesday that the pension plan of Dignity Health is covered by ERISA.
The San Francisco-based health-care company had claimed exemption as a church plan.
In the decision, U.S. District Court Judge Thelton Henderson in San Francisco granted partial summary judgment to plaintiffs, who will now have to ask the court to have ERISA rules applied to their plan.
Dignity Health has relied on an Internal Revenue Service ruling granting it church plan status, but Mr. Henderson ruled that “an erroneous IRS ruling … should not be permitted to trump a court's interpretation of a statute … and certainly should not be permitted to persist indefinitely simply by virtue of having come first.”
The ruling “addressed these arguments effectively,” said Pension Rights Center spokeswoman Nancy Hwa. “And it definitely bolsters the argument we've making for a long time, that these plans should not have church plan status.”
Dignity Health said in a statement it will continue to defend the case and it believes it has complied with the law. “Dignity Health values the contributions our employees make to our mission, and we remain committed to ensuring our retirees and beneficiaries receive the benefits they have earned,” the statement said.
Separately, two new cases challenging church plan status were recently filed against St. Anthony Medical Center in Illinois and Trinity Health Corp. in Maryland.