Supreme Court temporarily halts Dignity Health church plan ruling

The U.S. Supreme Court granted a request by Dignity Health to temporarily halt a ruling that the church-affiliated defined benefit plan sponsor is covered by the Employee Retirement Income Security Act.

The stay, granted Wednesday, is effect until the Supreme Court rules on a pending petition by Dignity to hear its appeal. If the court denies that petition, the stay will be lifted.

On July 26, the U.S. Court of Appeals in San Francisco affirmed a District Court decision that the Dignity Health pension plan is subject to ERISA. The San Francisco-based health-care company had claimed exemption as a church plan, relying on an IRS ruling.

“Agreeing with other circuits, the panel held that a church plan must be established by a church or convention or association of churches and must be maintained” by them, U.S. Circuit Judge William Fletcher wrote in the order remanding the case to the District Court for further proceedings.

In July 2014, 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.”

The Supreme Court has also been petitioned by Saint Peter’s Healthcare and Advocate Health Care to hear their appeals of lower court orders denying their church plan status.