Click here for a short summary of the issue. Click here for a detailed timeline.
See also the Pension Rights Center website.
Click here for ex-St. Peter's CEO John Matuska's 2011 letter to the IRS.
Click here for ex-St. Peter's VP of HR Bruce Pardo's 2011 letter to the IRS.
Haga clic aqui para verun resumen del problema en español.
Monday, May 25, 2015
A May 19 article published by Bloomberg BNA (also courtesy Pension Rights Center) summarizes the current state of the Saint Peter's case, how it relates to the other pending cases, and a slew of amicus ("friend of the court") briefs recently filed on behalf of both parties in the case. Currently the parties are waiting for a date to be set for oral argument, following which the court will presumably issue a ruling. The Saint Peter's case may be the first of the twelve cases to result in an appellate ruling. The ultimate decision on whether church-affiliated hospitals can use ERISA's church plan exemption will likely have to be rendered by the Supreme Court.
One of the amicus briefs in support of the pension plan members was filed by Pension Rights Center. In it they argue that the recent trend of church-affiliated hospitals declaring "church plan" status, enabled by favorable rulings from the IRS, is contrary to both the clear language of the ERISA statute and the evident intent of the lawmakers who created and amended its church plan exemption. They point out the facts -- which Saint Peter's plan members know all too well -- that Saint Peter's set up and ran the plan under ERISA regulations for 32 years, until they decided to seek a church plan ruling. Other briefs on behalf of the members were filed by the Freedom From Religion Foundation; AARP and the National Employment Lawyers Association; and Americans United for Separation of Church and State, American Civil Liberties Union, and ACLU of New Jersey. These other briefs focus on the unfair advantages a church plan exemption would give to church-afflilated hospitals, which compete in the same marketplace as secular hospitals.
The amicus briefs in support of Saint Peter's were filed by Catholic Health Association, GuideStone Financial Resources of the Southern Baptist Convention, the Becket Fund for Religious Liberty, and Catholic Health East, the defendant in another suit which is currently stayed pending the result of this case. These seem to make clear that Saint Peter's and the other corporations involved in similar cases will, explicitly or implicitly, try to exploit the new leeway granted to closely held corporations to exercise "religious freedom" by the 2014 Supreme Court ruling in Burwell v. Hobby Lobby. The briefs stipulate that a strict reading of the ERISA law constitutes religious discrimination. The brief from the Becket Fund, a non-profit law firm that was the legal power behind Hobby Lobby, suggests that how a church wants to manage itself is no business of the state.
The briefs filed by and on behalf of both parties in the case can be viewed here.
Meanwhile, Saint Peter's has issued an update letter to plan participants that doesn't contain much that's new. It does state that the "Plan remains frozen and Saint Peter's continues to fund the Defined Benefit Plan on a weekly basis... ." Maybe we're mistaken, but doesn't a plan that must be regularly funded after it's been frozen qualify as either underfunded and/or mismanaged? It also states, "All retired beneficiaries continue to receive all benefits under the Plan to which they are entitled." All claims are in the present tense; missing are any claims or promises about the future of the plan.
Saturday, May 10, 2014
For much more on the ruling, see the always reliable Thomas E. Clark Jr.'s post in the Fiduciary Matters Blog (formerly FRA PlanTools blog). The ruling hinged largely not on the specifics of the Ascension Health case, but on an interpretation of the ERISA statute that starkly opposes that of the judges in the Saint Peter's and Dignity Health cases. The judge ruled that the section of the statute that allows church-associated entities to manage a church plan removes the requirement, stated plainly in an earlier section, that such a plan be established by a church. The judge also ruled that the IRS's earlier rulings deserve deference in the case.
As Clark mentions in his summary, the opposing views in the federal district courts hint that the issue may well eventually be decided by the U.S. Supreme Court. We may have more on this later. Update 5/14/2014: We understand the plaintiffs in Overall v. Ascension Health plan to appeal this decision.
Thursday, April 10, 2014
Saturday, April 5, 2014
Another article has been published about the decision, this one on April 4 on the website of PLANADVISOR magazine.
Thursday, April 3, 2014
- Adam Geller, Associated Press (April 1, published in many newspapers)
- Charles Toutant, New Jersey Law Journal (April 1)
- Hazel Bradford, Pensions & Investments (April 1)
- Bob Makin, Courier News/Home News Tribune (April 3)
We'll get back to those articles a bit later.
Judge Shipp's ruling, in denying Saint Peter's claim that their pension plan is entitled to ERISA's church plan exemption, also denies their motion to dismiss the case. The case can thus now proceed, a process which we expect to take several months.
Tuesday, April 1, 2014
The ruling negates the IRS's August 2013 private letter ruling that the Saint Peter's plan is a church plan. It essentially agrees with, and we would say bolsters, the similar recent ruling in the related Dignity Health case in California. Litigation is not complete in either case, but as in the Dignity case, the essence of the Saint Peter's case has been decided by this ruling. We do not know whether Saint Peter's might make changes to the management of the pension plan in the near term. We don't know if they can stand pat until the completion of the case, or afterwards pending an appeal. We do know they can no longer claim that the Saint Peter's plan is a church plan.
Heartfelt congratulations to Larry Kaplan, who took on this burden on behalf of all the Plan members; the law firms arguing the case for the plaintiffs, led by Karen Handorf at Cohen Milstein; and to the members of the Saint Peter's pension plan, those still working and those now retired, whose victory this is. More soon.
Monday, March 31, 2014
The judge was by all accounts well-prepared with a good understanding of the issues. There was much interest and discussion of the recent decision in the related case Rollins v. Dignity Health that that corporation's pension was not a church plan under federal law. Like the judge in that case, Judge Shipp dismissed as irrelevant all discussion of the IRS's recent history of granting church plan status to organizations that have only an association with a church. He said he would issue a ruling on Saint Peter's motion sometime the following week, i.e., this week. This would be a very rapid result; judges (reportedly) typically take two months to a year to issue such rulings. This ruling would not necessarily decide the case, as the Dignity ruling essentially has in that case; we will have to wait and see what develops.
We await the impending ruling with cautious optimism, and we will issue a post when we hear a result. Thanks for your patience!