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.