Advocate Health Care Network, et al. v. Stapleton, et al.

A pension plan maintained by a principal-purpose organization qualifies as a “church plan,” regardless of who established it, and is exempt from ERISA’s requirements.

Petitioners are church-affiliated nonprofits that run hospitals and other healthcare facilities. Petitioners offer pension plans to their employees, which were established by the hospitals themselves. The Employee Retirement Income Security Act of 1974 (ERISA) obligates private employers offering pension plans to adhere to certain rules. However, church plans are exempt from ERISA’s requirements. Initially, ERISA provided that a “church plan” means a plan established and maintained . . . by a church or by a convention or association of churches.” §1002(33)(A).  However, the statute was amended to expand the previous definition as follows: “[a] plan established and maintained . . . by a church . . .” includes a plan maintained by a church-associated entity or what the U.S. Supreme Court refers to as a “principal-purpose organization.” §1002(33)(C)(i). Respondents, employees of the hospitals, filed class actions alleging that Petitioner’s pension plans do not fall within ERISA’s church-plan exemption and as a result, must satisfy ERISA’s requirements. Respondents claim that the ERISA amendment requires all church plans to be established by a church. The District Courts agreed with the employees and the Third, Seventh, and Ninth Circuits affirmed. Starting with the statutory language, the U.S. Supreme Court held that the use of the word “include” in the amended section tells readers that a different type of plan (a principal-purpose organization) should receive the same treatment as the type described in the old definition. Respondents contend that Congress intended only to alter the maintenance requirement of the definition and not the establishment requirement. However, if this was the case, then Congress could have chosen to write, “a plan maintained by a church includes a plan maintained by” a principal-purpose organization. Congress did not chose this ready alternative and instead provided that “a plan established and maintained by a church includes a plan maintained by” a principal-purpose organization. In addition, both parties’ assertions of Congress’s purpose in enacting the amendment confirms that plans maintained by principal-purpose organizations fall under the church-plan exemption, regardless of their establishment. Therefore, a pension plan maintained by a principal-purpose organization qualifies as a “church plan,” regardless of who established it, and is exempt from ERISA’s requirements. REVERSED.