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, March 28, 2016
Sunday, March 20, 2016
Using much the same logic as the 3rd U.S. Circuit Court of Appeals in Kaplan v. St. Peter’s Healthcare System, the 7th Circuit decided a church plan established by a church and maintained by a church is a church plan, and a church plan established by a church and maintained by a church-affiliated organization is a church plan—but a church plan established by a church-affiliated organization and maintained by a church-affiliated organization is not a church plan. The appellate court in Advocate agreed with the 3rd Circuit that, according to the language of ERISA, for church plan exemption, there are two requirements—establishment and maintenance—and only the maintenance requirement is expanded by the use of the word “includes.”The Cohen Milstein law firm, having now won their second straight appellate judgment in this recent group of cases, deserves to crow a little; they do so in this informative press release.
Thursday, March 17, 2016
Thursday, January 21, 2016
We had previously thought it unlikely that Saint Peter's would file for a rehearing, since the panel's unanimous decision would suggest a slim chance of success before the full court. Our guess is that the purpose of the move is to buy time before the hospital's ultimate objective of having the case heard before the Supreme Court. This is the first case of many essentially similar class action cases to have been decided in an appellate court. Saint Peter's points out in the letter that two other such cases are in process in appellate courts: one involving Advocate Health Care Network, which was argued in September, and one involving Dignity Health, scheduled for argument this coming February. Significantly, in both cases the hospitals lost in district court. For Saint Peter's to have a chance before the Supreme Court, they would need a win for a hospital in appellate court to counter their own defeat -- which would seem a long shot given the cases now before appellate courts and the 90-day filing window. If their petition is accepted, Saint Peter's holds off a court order to run the plan as an ERISA plan, while buying time for an appellate court win, in either of the two current appellate cases or one which eventually filters up from the district courts. In the meantime Saint Peter's can continue to run the pension plan as a church plan, with minimal federal oversight or funding requirements.
Sunday, January 10, 2016
- Charles Toutant in New Jersey Law Journal gives a quick history of the issue and a summary of the ruling, along with quotes from lead attorneys Karen Handorf for the plan members and Jeffrey Greenbaum for the hospital. This is the first statement we've seen on behalf of the hospital in the wake of the ruling. Greenbaum makes clear that the hospital plans to exhaust its legal options before making any changes to its management of the pension plan.
- Rebecca Moore at PLANSPONSOR provides a somewhat more in-depth summary of how the court interpreted the intent of the ERISA statute's church plan exemption by studying its history. Both this and the New Jersey Law Journal article make clear that the ruling sets a precedent for the circuit courts, though apparently other cases pending in the appellate courts could make a contradictory ruling on other grounds, perhaps leading to review by the Supreme Court.
- Cohen Milstein, Karen Handorf's law firm, has issued a press release following the court victory.
Wednesday, December 30, 2015
The basis of the court's opinion is that the "plain meaning" of the ERISA statute requires that to meet the church plan exemption, a pension plan must have been established by a church. Saint Peter's has sought (and claimed) church plan status based on a new interpretation of amendments made to ERISA in 1980, to allow an agency of a church to maintain such a plan; Saint Peter's has claimed that this clause expands the definition of a church plan enough to claim the exemption. The court disagreed, and also cited the "remedial" nature of the statute: its purpose was to protect plan members. In the court's opinion, construing the exemption so broadly would achieve the opposite of the statute's intent. As in the district court ruling that preceded it, the court gave no deference to the IRS's rulings, starting with a 1983 memo, that interpreted the 1980 amendments as a broad exemption for church-related agencies. The court also addressed, and rejected, a new (and recently in vogue) First Amendment argument: that denying a church plan exemption somehow violates the hospital's right to free exercise of religion: "St. Peter’s has not offered any reason why the First Amendment entitles it to a retirement plan structured using a particular corporate form."
In Clark's reading of the opinion, "(t)his is a significant victory for those who have challenged the broad interpretation of the church plan exemption. It should be given serious persuasive consideration by the other circuit and district courts with similar cases." Clark also, however, cites a recent district court ruling in a similar case, which not only went in favor of the church affiliated hospital system, but "also strongly suggested the hospital system itself may meet the definition of a church itself" (emphasis Clark's). Because of the contradictory opinions handed down in the federal courts, we are likely to see the ultimate decision in this case come from the Supreme Court. Since it likely remains cheaper for the hospital to continue to fight the case than to restore the funding of the pension plan, let alone the retroactive PBGC insurance premiums, we don't expect the hospital to change its strategy now.
Tuesday, December 29, 2015
Big thanks to Karen Handorf and her legal team for arguing a great case, to Karen Ferguson and all at the Pension Rights Center for their help. and to Larry Kaplan for taking on this burden and seeing it through on behalf of all the pension plan members.