We only just found out (sorry!) but we have a bombshell development to share, along with an update on the Saint Peter's class action suit.
Last December 12, the U.S. District Court judge in the case of Rollins v. Dignity Health ruled that the hospital system in that case was not entitled to "church plan" status. This is one of the five ongoing class action lawsuits (including Kaplan v. Saint Peter's Healthcare System) challenging Catholic hospital systems that have declared "church plan" exemptions for their pension plans. The law firms on the plaintiff's side are the same ones representing Larry Kaplan and the Saint Peter's plan membership, and the arguments they put forward are very similar (in all five cases, in fact), so this is a very heartening development indeed.
Thomas E. Clark, Jr. at the FRA PlanTools blog wrote a summary of the ruling that we really can't improve upon. We urge everyone to read it in its entirety, as well as the ruling itself.
In denying Dignity Health's motion to dismiss the case, Judge Henderson agreed with the plaintiffs' arguments in several important respects. According to his reading of the ERISA statute, only a church or association of churches can establish a church plan. (The subsection of the statute about church associated organizations [e.g., hospitals] allows them to maintain a church plan established by a church, but not to establish a church plan. Interpreting the statute to allow church associated organizations to establish such a plan would make superfluous the previous section of the statute, actively retained by Congress when they amended the statute, thus that interpretation is incorrect.) The ruling rejected the IRS's 30-year history of awarding church plan status to associated organizations as erroneous and lacking the force of law. It also argued that numerous prior court decisions granting church plan status to associated organizations were wrong, giving clear reasons why they were wrong.
Clark calls the decision "a resounding victory for the plaintiffs" -- though the ruling does not end the case (it was a rejection of Dignity's Motion to Dismiss), it rules that Dignity now stands in violation of ERISA. He concludes, "Although this decision does not directly apply to any plan but the one sponsored by Dignity Health, this could change everything if it becomes the law of the land, rather than just the law of this case."
Well, that's what we're hoping for. In the Saint Peter's case, oral argument on Saint Peter's Motion to Dismiss is scheduled for March 24. Karen Handorf of Cohen Milstein will argue on behalf of Larry and his fellow plan members, and the recent ruling in the Dignity Health case will be foremost in the minds of those in attendance. We will post further news when we get it (hopefully much more swiftly next time).
The management of Saint Peter's University Hospital is using the church to exempt itself from the Federal safeguards that protect your retirement plan. For an introduction, see Your Pension At Risk.
