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.

Friday, October 30, 2015

Oral Argument Follow-up

On Thursday, October 8, a panel of judges in a federal appeals court in Philadelphia heard oral arguments in the Saint Peter's pension case. An audio recording of the proceedings is available here (MP3 format, 22 MB). The recording is somewhat distorted due to heavy digital compression; we suggest listening with headphones.

The judges were well-prepared and asked tough questions of the attorneys for both parties: Jeffrey Greenbaum for Saint Peter's, and Karen Handorf for Larry Kaplan and the pension plan membership. The questions for Greenbaum focused on Saint Peter's claim (common to the healthcare corporations involved in such cases) that the ERISA law, as amended in 1980, expanded the definition of church plans to include those not explicitly established by a church. The judges also questioned why Saint Peter's managed the pension plan for 30 years as an ERISA plan when they were ostensibly not required to do so. Greenbaum responded (prompted by one of the judges, rather oddly) that a change in the funding formula by "the government" brought about the switch, and that "the whole point of the exemption is to keep religious institutions free from government regulations."

Handorf was questioned on the long history of IRS church plan rulings in favor of church-related organizations. She argued that these rulings were in fact erroneous, and not focused on the language of the ERISA statute, which only intended a narrow exemption for churches. She also mentioned that Saint Peter's competes in the same market and "earns its money" in the same way as other healthcare corporations, and thus the exemption grants Saint Peter's an unfair competitive advantage.

The next step will probably be for the court to issue a decision in the case. We cannot predict how long that will take; it could be weeks or months. We hope the court recognizes Congress' intention that only plans established by churches should be exempt from the protections of federal law. We'll post again as soon as we hear more.

Thursday, August 27, 2015

New Date for Oral Argument

Oral argument in the Saint Peter's appeal has been rescheduled for Thursday, October 8 at 10:00 am at the U.S. Courthouse in Philadelphia. It had been previously scheduled for September 28. We will keep you informed of any further changes or updates.

Monday, August 24, 2015

Pension Plan Financial Update

A review of the Saint Peter’s 2014 financial statements shows that the unfunded pension liability doubled in one year: from $56 million in 2013 to $114.8 million in 2014. During meetings with plan participants, management stated that the intent was to fully fund the plan over a 10 year period. In 2014, only $3 million was funded, while payments to plan participants totaled $6.9 million. This is far short of management’s stated intent. The statements indicated that only $3 million will be funded in 2015. While management spends hundreds of thousands of dollars on new administrative offices, they cannot find the money to adequately fund a pension plan on which hundreds of retirees depend. It is time for a change in management and for the bishop to cede control of the hospital to an independent board. No bishop is above the Church’s teachings on social justice and worker’s rights, including Bishop Bootkoski.

Oral argument in Saint Peter's pension case appeal is (still) set for September 28 before the Third Circuit appeals court in Philadelphia.

Tuesday, July 28, 2015

Date Set For Oral Argument in Pension Case

The Circuit Court deciding the fate of the Saint Peter's pension plan (in the near term, at any rate) has set a date for oral argument in the case. As this notice from the court indicates, oral argument has been tentatively set for September 28 at the U.S. Courthouse in Philadelphia. It's possible that the judicial panel will forgo oral argument and decide the case based on the existing briefs, or that the court will reschedule the hearing for later in the week. We should know more as we get close to September 28, and we will share any news with you here.

Monday, May 25, 2015

Lawsuit Update

Saint Peter's appeal of last year's district court ruling in Kaplan v. Saint Peter's Healthcare System -- in which the hospital's pension plan was deemed not a church plan -- was filed January 20 of this year, and is ongoing. The appeal is being heard in the US Court of Appeals for the Third Circuit in Philadelphia. Including the St. Peter's case, there are now twelve ongoing lawsuits challenging hospitals and healthcare corporations which use their association with a church to shield their pension plans from the federal ERISA regulations designed to protect workers' rights. Of the seven cases so far that have been decided at the district court level, four have been decided in favor of the healthcare corporations, and three (including St. Peter's) in favor of pension plan members. The Pension Rights Center has posted a status chart of all the cases; they plan to update this chart in the future, as needed.

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

Judge in Related Case Rules Hospital Plan a Church Plan

In one of the five related class-action lawsuits challenging Catholic hospital systems which have sought to have their pension plans ruled "church plans," exempting them from ERISA protections, a federal judge has ruled in Overall v. Ascension Health that the plan in the case is by law a church plan. The decision is contrary to the recent decisions in Kaplan v. Saint Peter's Healthcare System and Rollins v. Dignity Health, in which the hospital systems were deemed not eligible for church plan status. The judge ruled in favor of Ascension Health's Motion to Dismiss, thereby dismissing the suit.

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


We are glad to post the following message from Larry Kaplan's legal counsel:

Please do not contact Larry Kaplan, the named plaintiff in the Kaplan v. Saint Peter's Healthcare System lawsuit.  Larry is represented by counsel.  Please direct any inquires to his lawyers at Cohen Milstein.  They may be reached at (202) 408-4600. Thank you.

We would add that this request does indeed apply to you.