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, 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.