U.S. Supreme Court Upholds Long Standing ERISA Exemption for Church-Affiliated Hospitals and Other Charities, Thereby Averting Bankruptcies and Mass Closures
On June 5, 2017, the United State Supreme Court ruled unanimously (8-0, Gorsuch, J. not participating) to uphold a long-standing broad reading of the so-called “church exemption” under the federal Employee Retirement Income Security Act, known as ERISA, as encompassing “church-affiliated” employee benefit plans as well as “church-established” plans. The Thomas More Society played a key role in filing amicus briefs in this trio of cases, on appeal from federal appellate courts in Chicago, San Francisco, and Philadelphia, respectively. The three appeals were consolidated for hearing before the Supreme Court – Advocate Health Care Network v. Stapleton, Dignity Health v. Rollins and Saint Peter’s Healthcare System v. Kaplan.
This decision protects non-profit religious health institutions and other religiously-affiliated charitable service employers across the nation, against which class action lawyers had filed a host of huge lawsuits, claiming that the non-profits were covered by ERISA and thus liable for millions of dollars in retroactive penalties, even though federal administrative agencies charged with the interpretation and enforcement of this complex federal statute had uniformly assured them over several decades that they were exempt from ERISA’s “array of rules designed to ensure [employee benefit] plan solvency and protect plan participants.” At issue was whether ERISA’s wording only exempted benefit plans that had been “established and maintained” by a church, rather than by an affiliate of a church, such as an order of nuns. Given decades of exposure to retroactive penalties, hundreds of Catholic, Lutheran, and other religiously affiliated hospitals, as well as retirement homes, nursing homes, day-care centers, schools and academies, universities, child-protection organizations, and many other types of social service organizations serving immigrants and other lower-income communities were at risk of bankruptcy or closure had this exemption issue been decided in favor of the other side. Yet, each of the federal appellate courts from which these appeals were taken had ruled against these religiously-affiliated hospitals.
Thomas More Society President and Chief Counsel Tom Brejcha remarked, “This was a very important and especially welcome decision that adhered to a consistent thirty-year interpretation of the exception to ERISA’s many complicated and technical requirements, by which Congress originally intended to recognize the significant social benefits provided by these non-profit entities, inspired by their religious affiliation, including their ample and generous benefits provided for their own employees. A contrary result, retracting decades of assurances on the part of government agencies that they were exempt from ERISA’s requirements, would have been catastrophic and utterly ruinous to an entire class of social service providers. It would have been a gross injustice of tragic proportions.”
Brejcha added, “This unanimous Supreme Court decision protects the principled independence and fiscal viability of church-affiliated hospitals and other service agencies and has staved off this latest assault on the citadel of religious liberty in our country. What once we took for granted – that our constitutional guarantee of the ‘free exercise of religious faith’ includes not only the right to preach one’s the faith but also the right to practice it outside the four walls of churches – has now been defended with vigor and resolve, and affirmed by the highest court in the land.”
Thomas More Society’s amicus brief in support of the Supreme Court exercising its discretion to hear and decide these cases was authored by Washington DC attorney, Alan E. Untereiner of the law firm of Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP. That brief won special praise from Lisa Blatt, former deputy Solicitor General of the U.S. who briefed and argued the consolidated appeals for all three religiously-affiliated hospitals, as “just fantastic,” “a compelling read” with “[v]ery nice touches throughout,” and “incredibly well written and such a pleasure to read that it put me in a good mood,” adding: “Thank you … and the folks at Dignity [Health] are also going to love this brief for attacking the [lower court 9th Circuit decision) so effectively.” Ms. Blatt closed, “I would lean toward a grant [of Supreme Court review] after reading this. I hope I have not become delusional but I just don’t see how the Court can pass these cases up.” Indeed, it was nothing short of a sharp reversal of fortune when these three straight losses in the lower appellate courts turned into a unanimous win before the Supreme Court!
View the June 5, 2017, Supreme Court of the United States decision in Advocate Health Care Network et al. v. Stapleton et al. here.
View the Thomas More Society’s August 2016 amicus brief – the brief that won such effusive praise from Lisa Blatt – supporting religiously affiliated Advocate Health Care Network and Saint Peter’s Healthcare System in the United States Supreme Court here.
The Society also filed two other amicus briefs in San Francisco and later on the merits in the Supreme Court.