Saint Peter's Seeks Rehearing Before Appeals Court

Saint Peter's management, in a January 15 letter to pension plan members, reports that they have filed for a rehearing of their failed appeal in the Third Circuit appeals court. Their original appeal was denied by a unanimous three-judge panel in late December; the rehearing, if Saint Peter's petition is accepted, would be before the full Court.

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.

Further Coverage of Appellate Ruling

Since our last post, more news items have been published about the recent appellate court victory for Saint Peter's pension plan members.

• 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.