Federal regulators back church-plan sponsors in Supreme Court challenge

Federal pension regulators joined the U.S. solicitor general in urging the Supreme Court to overturn lower court rulings that church-affiliated defined benefit plan sponsors must be covered by the Employee Retirement Income Security Act.

Officials from the Department of the Treasury, Internal Revenue Service, Department of Labor and Pension Benefit Guaranty Corp. signed an amicus brief filed Jan. 24 by the deputy solicitor general in a case consolidating three cases brought by plan sponsors Dignity Health, Advocate Health Care and Saint Peter's Healthcare, who are appealing lower court decisions that they are bound by ERISA.

The Supreme Court agreed Dec. 2 to take the cases as one, but has not yet scheduled arguments. The key question is whether such plans have to be initially set up by a church.

“Until recently, no court had questioned the agencies' longstanding interpretation of the church-plan exemption. Since 2013, however, that interpretation has been challenged in dozens of class-action suits filed by employees of religious hospitals and health-care providers,” the federal government's brief said.

“In 1980, Congress amended ERISA to allow the employees of a religious hospital or other church-affiliated non-profit organization to be covered by an exempt church plan. Ever since, the agencies responsible for administering ERISA's complex regulatory scheme have consistently concluded that such a plan need not be initially established by a church to qualify as exempt. That longstanding interpretation is correct,” said the brief. “If there were any doubt about the best interpretation of the church-plan definition, it would be resolved by the position adopted and consistently applied by the IRS, DOL, and PBGC.”