The law in question, the Employee Retirement Income Security Act, regulates pension plans of for-profit corporations, requiring the employers to hold an additional amount of funds in reserve. Setting up these reserves could be cost-prohibitive especially for community hospitals, some of whom “are not going to be able to do that,” Rassbach said.
“If Advocate and hundreds of other religious hospitals around the country were forced to follow for-profit rules, money currently used to serve the poor and inner city communities would be lost and many would be forced to shut down,” the Becket Fund argued.
Congress has recognized a religious exemption for pension plans of churches, and entities like St. Peter’s Hospital in New Jersey applied for this exemption after operating their pension plans according to the federal regulations for years. The plaintiffs bringing the suit, employees of the health care networks, claim their pension plan agreements are being unfairly altered.
The religious exemption applies to plans “established” and “maintained” by churches. In the case of St. Peter’s HealthCare, decided by the Third U.S. Circuit Court of Appeals, the court ruled that since the Catholic Church (through a diocese or parish) did not “establish” the pension plans, they were not eligible for the ERISA religious exemption, even if a “church agency” like a religious order set up the plan.
St. Peter’s is a non-profit health care system sponsored by the Diocese of Metuchen. The court conceded that it has Catholic ties, like daily Mass offered at the hospital, Catholic devotionals present there, and many board members who are appointed by the local bishop.
“But can a church agency, in addition to maintaining an exempt church plan, also establish such a plan? The District Court concluded that it cannot. We agree,” the appeals court decided.
It also conceded that for years, plans set up by “church agencies” were recognized by the courts as religiously exempt: “In the decades following the current church plan definition’s enactment in 1980, various courts have assumed that entities that are not themselves churches, but have sufficiently strong ties to churches, can establish exempt church plans.”
“However,” the court added, “a new wave of litigation, of which this case is a part, has sprung up in the past few years and has presented an argument not previously considered by courts – that the actual words of the church plan definition preclude this result.” New lawsuits are shedding light on the “plain text” of ERISA that churches and only churches can set up pension plans that meet the religious exemption, the court said.
There are around 100 similar lawsuits involving religious hospitals – many of which are Catholic, Rassbach noted. New litigation is “taking from the poor to give to the rich class-action lawyers,” he argued.
Not only did the courts recognize that these religious entities were eligible for the pension exemption, but the IRS did as well, he maintained.
This question was raised in Monday’s oral arguments, where Justice Stephen Breyer pressed James Feldman, representing the respondents suing the health care networks, on whether orders like the Little Sisters of the Poor should be recognized as part of churches.
Justice Breyer asked “if it's a legitimate organization like, let's say the Little Sisters of the Poor, really affiliated with the church,” if they would be recognized as part of a church.
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The U.S. bishops’ conference and religious freedom legal groups like the Becket Fund and Alliance Defending Freedom have sided with the health care networks in the case, saying that it is a religious freedom issue.
In their amicus brief siding with the St. Peter’s HealthCare and Dignity Health, the U.S. Conference of Catholic Bishops argued that while Catholic health care providers may not be officially part of a church or parish structure, their plans should meet the religious exemptions under ERISA.
“Indeed, charity has always been a core component of the Catholic Church’s activities, ‘as essential to her as the ministry of the sacraments and preaching of the Gospel’,” the USCCB said, quoting Pope Benedict XVI’s encyclical “Deus Caritas Est.”
This charity is lived out “through myriad Catholic ministries” like health care providers, they added, which should be treated as part of the Church.
And these charities may or may not be directly affiliated with Catholic dioceses and parishes or with the Holy See, they continued, “yet, as a matter of Catholic theology, the various ministries that the Church recognizes as Catholic ministries are all part of the Church” even though “they may be (and often are) civilly, structurally, and financially independent entities.”
These employers must be given a religious exemption, the bishops’ conference added, saying that “long before” the ERISA regulations were enacted for pension plans, “Catholic charitable organizations provided their workers with generous benefits.”