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 31, 2014

Lawsuit Update

Last Thursday, March 27th in New Jersey District Court in Trenton, Judge Michael A. Shipp heard oral arguments from the litigants in Kaplan v. Saint Peter's Healthcare System concerning Saint Peter's motion to dismiss the case.

The judge was by all accounts well-prepared with a good understanding of the issues. There was much interest and discussion of the recent decision in the related case Rollins v. Dignity Health that that corporation's pension was not a church plan under federal law. Like the judge in that case, Judge Shipp dismissed as irrelevant all discussion of the IRS's recent history of granting church plan status to organizations that have only an association with a church. He said he would issue a ruling on Saint Peter's motion sometime the following week, i.e., this week. This would be a very rapid result; judges (reportedly) typically take two months to a year to issue such rulings. This ruling would not necessarily decide the case, as the Dignity ruling essentially has in that case; we will have to wait and see what develops.

We await the impending ruling with cautious optimism, and we will issue a post when we hear a result. Thanks for your patience!

Friday, March 14, 2014

Big Victory in Related Case; SPUH Lawsuit Update

We only just found out (sorry!) but we have a bombshell development to share, along with an update on the Saint Peter's class action suit.

Last December 12, the U.S. District Court judge in the case of Rollins v. Dignity Health ruled that the hospital system in that case was not entitled to "church plan" status. This is one of the five ongoing class action lawsuits (including Kaplan v. Saint Peter's Healthcare System) challenging Catholic hospital systems that have declared "church plan" exemptions for their pension plans. The law firms on the plaintiff's side are the same ones representing Larry Kaplan and the Saint Peter's plan membership, and the arguments they put forward are very similar (in all five cases, in fact), so this is a very heartening development indeed.

Thomas E. Clark, Jr. at the FRA PlanTools blog wrote a summary of the ruling that we really can't improve upon. We urge everyone to read it in its entirety, as well as the ruling itself.

In denying Dignity Health's motion to dismiss the case, Judge Henderson agreed with the plaintiffs' arguments in several important respects. According to his reading of the ERISA statute, only a church or association of churches can establish a church plan. (The subsection of the statute about church associated organizations [e.g., hospitals] allows them to maintain a church plan established by a church, but not to establish a church plan. Interpreting the statute to allow church associated organizations to establish such a plan would make superfluous the previous section of the statute, actively retained by Congress when they amended the statute, thus that interpretation is incorrect.) The ruling rejected the IRS's 30-year history of awarding church plan status to associated organizations as erroneous and lacking the force of law. It also argued that numerous prior court decisions granting church plan status to associated organizations were wrong, giving clear reasons why they were wrong.

Clark calls the decision "a resounding victory for the plaintiffs" -- though the ruling does not end the case (it was a rejection of Dignity's Motion to Dismiss), it rules that Dignity now stands in violation of ERISA. He concludes, "Although this decision does not directly apply to any plan but the one sponsored by Dignity Health, this could change everything if it becomes the law of the land, rather than just the law of this case."

Well, that's what we're hoping for. In the Saint Peter's case, oral argument on Saint Peter's Motion to Dismiss is scheduled for March 24. Karen Handorf of Cohen Milstein will argue on behalf of Larry and his fellow plan members, and the recent ruling in the Dignity Health case will be foremost in the minds of those in attendance. We will post further news when we get it (hopefully much more swiftly next time).