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.
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.
Friday, October 30, 2015
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
Monday, August 24, 2015
Oral argument in Saint Peter's pension case appeal is (still) set for September 28 before the Third Circuit appeals court in Philadelphia.