Oral Arguments Presented to Supreme Court About Church Plan Cases

Tess Gee, member in the ERISA & Employee Benefits Litigation practice at Miller & Chevalier, says the stakes are high for all sides, including the government.

By Rebecca Moore | March 28, 2017
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The U.S. Supreme Court heard oral arguments this week in the cases of Advocate Health Care Network v. Stapleton, St. Peter’s Healthcare System v. Kaplan, and Dignity Health v. Rollins.

Of the many cases challenging whether an entity’s pension plan is a “church plan” under the Employee Retirement Security Act (ERISA), federal appellate courts ruled that the plans in these cases did not fit ERISA’s definition of “church plan.”

The bulk of the oral arguments focused on the definition of a church plan set forth in Section 3(33) of ERISA and whether deference should be given to Internal Revenue Service (IRS) letters granting church plan status to entities’ plans.

Lisa S. Blatt, counsel on behalf of the petitioners, argued that the holdings in the three district court cases should be reversed for three reasons. She said the text of the statute does not require a church to establish benefit plans for someone else's employees; the government's consistent view, over three decades, has generated enormous reliance interest and warrants deference; and affirmance would resurrect the precise problems that everyone understood the 1980 amendment would fix.

Blatt noted that the main text at issue is subparagraph C(i) of section 3(33) which she said expands the original church plan definition in subparagraph A. “Now, the only plausible reason that C(i) repeats the entire phrase "a plan established and maintained by a church" is Congress intended that C(i) redefine and modify that entire phrase,” she argued.

But, Justice Sonia Sotomayor pointed out there was a provision that was proposed that would have done very clearly what Blatt thinks this provision does now, and Congress didn't pass it.  Blatt responded that the clear thing in terms of this unpassed piece of legislation is it came out in the last couple of days of this several-year process, and it is implausible that that change went unnoticed when it would have excluded all the plans that the religious community was up in arms about, and all the plans that prompted the amendment in the first place.

Justice Elena Kagan pointed out there would be a simple way of accomplishing what Blatt thinks this provision accomplishes.  “You know, something along the lines of just saying any plan maintained by a church-affiliated organization is a church plan or something like that,” she suggested. “It's very odd language, this statutory language, and I'm wondering why you think that Congress chose to do what you think it chose to do in this perplexing way rather than in a straightforward way?”

Justice Ruth Ginsberg said she thought Blatt would like the provision to say includes a plan maintained by an organization controlled by or associated with a church, but the provision seems to be giving authority to principal-purpose organizations and not to entities controlled by or associated with a church.

Sotomayor asked Blatt, “Do you think Congress had in mind corporations that are essentially like every other corporation except they're not for profit?”  She pointed out that the Catholic Church has disavowed any formal affiliation with Dignity. She noted that the nuns may have established Dignity, but they're no longer are affiliated with the church. “They're not doing anything different than any other hospital. They are competing. They're the fifth largest health care provider in the nation. They have 60,000 employees.  Do you believe that Congress's vision was to let, what is essentially, a corporate entity opt out of protecting all of those employees?”

NEXT: The statute meaning is obvious