Supreme Court decision could affect church hospital employees

On Behalf of | Apr 18, 2017 | ERISA |

Catholic hospitals and other employers in Houston and around the nation are paying close attention to a case involving retirement plans that’s scheduled to be heard before the United States Supreme Court. Pension plans affiliated with church hospitals are regularly exempt from the Employee Retirement Income Security Act of 1974; however, the Supreme Court will soon be ruling on three cases that challenged that exemption.

All three hospitals lost their appellate pleadings and are thus headed to the Supreme Court. The plaintiffs are employees of Advocate Health Care Network, Dignity Health and St. Peters Healthcare System. As defendants, these health care organizations claim that they are religious nonprofits exempt from ERISA.

The issue at stake is the legal definition of a church or an enterprise managed by a church. For example, a diocese can be administered as a business with employees on payroll who may be entitled to a pension plan. Since it is clear that the diocese answers to the Vatican, its pension plans would be exempt from ERISA. A Catholic health care system of hospitals and clinics may adhere to religious dogma and be an active partner of the local church, but they do not have to answer to the Vatican.

The pension insurance plans required by ERISA are designed to protect employees in case their pension funds implode due to mismanagement or malfeasance. If the Supreme Court agrees with the plaintiffs in the aforementioned cases, the health care systems would be subject to paying millions of dollars in penalties, and they may be liable for legal claims involving employee benefits as they relate to pension plans.

Workers who feel that their employers are unfairly withholding pay or benefits may wish to reach out to attorneys. A lawyer could look into the situation and determine if legal action is warranted.


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