Insight to Action

Benefits & Healthcare Update: Church Plan Exemption from ERISA Does Not Apply to Religiously-Affiliated Hospital

31 March 2016

On March 17th, the Seventh Circuit Court of Appeals published the second appellate opinion concluding that plans established by religiously affiliated employers, including hospitals, do not enjoy the church plan exemption from ERISA because the plan was not established by a church. Since the church plan exemption does not apply to these plans, the plans must meet ERISA's requirements regarding plan documentation, filing, legal protections, and appeal procedures.

This Seventh Circuit opinion follows much the same reasoning as the first decision on this subject that was handed down by the Third Circuit in December 2015: by the terms of the statute, the exemption from ERISA only applies to plans established by churches themselves, not to plans established by church-affiliated organizations. The case involved a hospital's retirement benefits plan, but the same reasoning would apply to health and welfare plans established by church-affiliated organizations. The two decisions apply to plans only in the Third Circuit (Delaware, New Jersey, and Pennsylvania) and the Seventh Circuit (Illinois, Indiana, and Wisconsin), but courts in other jurisdictions may find these decisions persuasive.

The text of the Seventh Circuit's opinion can be found here:https://www.gpo.gov/fdsys/pkg/USCOURTS-ca7-15-0136...

Hospitals and other organizations with retirement and health and welfare benefit plans that rely on the church plan exemption should consult with their legal counsel about the effects these appellate decisions have on their plans with respect to ERISA.

If you have any questions regarding the effects of this opinion or the church plan exemption in ERISA, contact Ed Doherty at 646.839.8251 or via email at EDoherty@cammackhealth.com.

You can follow Ed on Twitter:@CHEdDoherty