Many religiously affiliated health systems may soon be pouring millions into underfunded employee pension plans, as federal appeals courts continue to side against them in cases concerning whether those plans are subject to federal protections. Experts say the issue, which involves such major health systems as Dignity Health, Presence Health and Catholic Health Initiatives, could end up in the Supreme Court.
The U.S. Court of Appeals for the 7th Circuit ruled that Advocate Health Care's pension plan is not a church plan simply because the health system is religiously affiliated. That means the plan is subject to the federal Employee Retirement Income Security Act (ERISA), which protects employees by requiring that pension plans be insured and sufficiently funded.
Last week's ruling was the second from a federal appeals court to side against a religious health system making such a claim. There are about a dozen such cases involving health systems nationwide, and more are likely on the way, said Karen Handorf, a partner at Cohen Milstein Sellers & Toll, which has brought many of the cases along with law firm Keller Rohrback.
Advocate noted in court documents that the whole point of exempting church plans from ERISA is to avoid government entanglement with religion. Allowing the government to pick and choose what is officially part of the church violates that separation, Advocate argued.
Stuart Gerson of Epstein Becker & Green, who works on healthcare cases but is not involved in the litigation, said the issue could eventually “become Supreme Court-worthy.” “There are a lot of these cases that are coming up all over the country, and they're not reaching the same result,” Gerson said. “That level of conflict is going to have to be fixed at some point.”