A federal judge is allowing Dignity Health to challenge his ruling that the church-affiliated defined benefit plan sponsor is covered by the Employee Retirement Income Security Act.
The San Francisco-based health-care company had claimed exemption as a church plan.
On July 22, U.S. District Judge Thelton Henderson in San Francisco granted partial summary judgment to plaintiffs in Rollins vs. Dignity Health, saying that while Dignity Health relied on an IRS ruling granting it church plan status, “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.”
On Nov. 26, Mr. Henderson granted Dignity Health's motion to appeal that decision, which is stayed while the 9th U.S. Circuit Court of Appeals decides whether to take it. If the appeals court reverses the lower court, “the litigation would take a decidedly different path,” Mr. Henderson wrote. With two other District Courts offering conflicting opinions and similar appeals by other church plan sponsors pending in two other circuits, “there are substantial grounds for disagreement here,” he said.
In a statement, Dignity Health said, “We appreciate Judge Henderson's recent decision. … (W)e remain committed to ensuring our retirees and beneficiaries receive the benefits they have earned. We believe we have complied with the law, including the applicable IRS requirements for our retirement plans.”