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.
Sunday, March 26, 2017
As the article states, the questions asked in oral argument should give us some idea of the court's thinking in the case. If we are lucky, the main focus will be on the language in the ERISA statute, as it was in all three appellate cases (which all three hospital organizations lost). As we surmised previously, the court will still have an even number of members when the case goes before it. A 4-4 split ruling is possible but "unlikely," as one ERISA attorney opines in the article. Such a decision would be a win for plan members in the three cases, since the appellate rulings would stand, but it would not provide the definitive guidance — one way or the other — sought by the appellees on behalf of all church-affiliated plan sponsors, and which the court likely wants to provide. Stay tuned.
Friday, March 24, 2017
Wednesday, March 1, 2017
Documents in the case can be found on the page for Saint Peter's Healthcare System v. Kaplan at the SCOTUSblog website. (Documents pertaining to the Supreme Court hearing can be found on dates after December 2, 2016, when the court granted the hospitals' petition for a hearing.)
In addition to briefs filed by the petitioners (the hospitals) and respondents (retirees), numerous organizations have filed amicus briefs on both sides of the argument. Church and church health organizations have filed, declaring, among other things, that the term "church" should be construed as broadly as possible, to encompass any entity with any conceivable connection to a church. As in the prior incarnations of these cases, they declare that subjecting church-affiliated organizations to regulations that govern other pension plans will infringe on the liberty of the church to act on its religious mission. (Interestingly, the United States—specifically the Treasury Department, the IRS, the Labor Department, and PBGC—has also filed on behalf of the hospitals.)
The Pension Rights Center's brief, by Drexel law professor Norman Stein and Karen Ferguson of the PRC, is a strong corrective. It gives several examples of organizations that have taken advantage of the church exemption, at the urging of benefits consultants like KPMG and Ernst & Young, and reaped a financial windfall. Many, like Saint Peter's, operated for decades as ERISA plans, only to retroactively claim church status in order to receive refunds of their PBGC insurance premiums (the predecessor of the petitioner in the related Dignity Health case received over $1.4 million in premium refunds after operating for 19 years as an ERISA plan). In addition, the lax funding and reporting requirements allow the organization to underfund the plan and keep its health secret from its members, often until it is abandoned in a buyout or bankruptcy. They note that in all these cases, the church disavows any financial responsibility for the affiliated organization's pension plan.
As in previous briefs (in cases the retirees won at the district and appellate level), PRC relates the history of the church plan exemption and explains how both the clear language of the ERISA statute and its legislative history make clear that the exemption was never intended as a broad exemption for church-related agencies. We hope the Court agrees that the church's "good work" should not include depriving workers of their promised retirement benefits.
Wednesday, December 14, 2016
- Joellen Leavelle of Pension Rights Center has published an excellent overview which should be required reading. (We admit, we rushed to publish the update in our previous post; Ms. Leavelle's is far superior.)
- The always reliable Hazel Bradford at Pensions & Investments has written a balanced, in-depth report.
- Karin Price Mueller of the Star-Ledger/NJ.com has an update to her Bamboozled item we featured in a previous blog post. Ms. Mueller again touches on another New Jersey hospital, St. James of Newark, whose corporate owners used the church exemption to stiff their retirees and bankrupt their pension plan.
We hear that the court will hear oral argument in the consolidated group of cases in March 2017, when the court will in all likelihood still have only eight members.
Tuesday, December 6, 2016
It seems strange that the Court would hear these cases when there has been no disagreement at the appellate level that the church exemption applies only to plans established by churches, according to a clear reading of the statute. The Court apparently accepted the argument of the hospitals' lawyers that decisions by the Department of Labor and the IRS which interpreted the statute differently should be given weight similar to the actual wording of the statute.
We will have more soon, but for now, here are three articles on this latest development from The National Law Journal, ABA Journal, and Reuters.
Tuesday, November 29, 2016
The article focuses on both St. Peter's plan and that of the now-defunct St. James Hospital of Newark. St. James' pension plan was starved of funds after a "church plan" ruling, then completely abandoned in a series of corporate mergers. The corporate parent(s) told one story (via press release, and probably to their retirees as well) at the time of the mergers about who was responsible for the plan, but now say that story was "incorrect or misleading"—while taking no responsibility for the outcome. St. James' plan will run out of money in the next few months; the plan's facilitator can't find the responsible party, and the Archdiocese of Newark won't return their phone calls.
It's not difficult to see the parallels. St. Peter's has done their best to rewrite the past, with help from their consultants and lawyers (e.g., "We have always been a church plan"), and their rare public statements about the plan are careful not to mention future benefits. Any words coming from St. Peter's or the Archdiocese of Metuchen about the plan should be subject to careful scrutiny.
As the article mentions, the Supreme Court's decision on whether to hear the St. Peter's case and/or others like it is imminent. We expect to have more for you on this very soon.
Friday, June 24, 2016
As you probably know, the case has been returned to the federal district court of New Jersey, after the Third Circuit in December 2015 denied Saint Peter's appeal, then in March 2016 denied a request to re-hear the case. Absent any new action from Saint Peter’s, the next task in the district court would be to resume the original lawsuit: legal discovery would begin, focusing on the extent of Saint Peter’s ERISA violations (e.g., underfunding the pension plan) so that remedial decisions/orders could be made to bring the plan back into compliance. Alas, none of this has happened.
Saint Peter’s has petitioned the Supreme Court to review their case — in the language of the Court, to grant certiorari (choose your favorite pronounciation). In the meantime Saint Peter’s has filed a motion with the district court to stay the proceedings there, pending the Supreme Court’s decision. The lawyers for the plaintiffs claim that the motion is procedurally improper because, among other things, the hospital cannot establish a reasonable probability that their argument will sway the Court. Remember, the Court's role is to resolve conflicting opinions in the appellate courts. Saint Peter’s has NO appellate court rulings they can cite to support their claim to the church-plan exemption, while the plaintiffs can now cite two appellate rulings supporting their arguments (the Saint Peter’s and Advocate decisions). The motion to stay seems clearly designed as a stalling action, to allow the possibility of a favorable ruling in another of the several similar cases now before the courts, and to allow the hospital to save money by continuing to operate the pension as a church plan.
At this point, we are waiting for the district court to rule on the motion to stay, or for the Supreme Court to decide whether to grant Saint Peter’s a hearing. The current Supreme Court term ends imminently, with the new term beginning in October, but (we believe) a decision could still be made during the summer recess.