A church plan challenge filed against Advocate Health Care Network Pension Plan, Downers Grove, Ill., can proceed, a federal judge ruled Dec. 31.
Denying Advocate’s motion to dismiss the case, U.S. District Judge Edmond Chang in Chicago said that Illinois’ largest health-care provider — a non-profit corporation affiliated with but not owned by two churches — does not qualify as a church plan, and is instead subject to the Employee Retirement Income Security Act.
Defense attorney Amy L. Blaisdell, a partner with Greensfelder, Hemker & Gale, said in an e-mailed statement that Advocate “relied in good faith” on a private letter ruling from the IRS that its plan qualified as a church plan. Mr. Chang said the IRS ruling is not entitled to deference.
“The finding that IRS private letter rulings have no persuasive value — even when issued to a party to the litigation — is troublesome and will leave many taxpayers uncertain as to how to operate their finances and benefit plans,” Ms. Blaisdell said in the e-mail. “The order diverges from 30 years of federal court cases and (IRS) opinion letters that have consistently found that church-associated organizations, such as Advocate, can sponsor plans that come within the ‘church plan’ exemption.”
Plaintiffs’ co-counsel Karen Handorf, a partner with law firm Cohen Milstein Sellers & Toll, said in an interview that Mr. Chang’s order “advances the litigation” because it is one of three recent District Court decisions “that carefully go through the statutory principles that only a church can sponsor a church plan.”
The case, filed in March 2014 by former and current Advocate defined benefit plan participants, is Stapleton et al. vs. Advocate Health Care Network and Subsidiaries et al.