Associate Justice Anthony Kennedy granted Dignity Health a temporary reprieve from complying with the federal Employee Retirement Income Security Act until the justices decide whether to take up their appeal. In July, the 9th U.S. Circuit Court of Appeals determined Dignity didn't qualify for a religious exemption from ERISA and its employee pension system couldn't be considered a church plan.
Dozens of lawsuits have been filed against faith-based organizations over the issue. The lawsuits target some of the nation's largest health systems.
Under ERISA, pension plans must be fully insured and funded, but religious organizations can be exempt from those requirements. Dignity and other faith-based organizations claim they should receive a similar pass, despite growing resistance from their employees.
In August, Dignity urged the Supreme Court to take up the issue and set a nationwide precedent about the church plan exemption. Until that happens, the health system claims it and other faith-based organizations will be subject to “devastating uncertainty” and costly litigation. It said a stay was necessary to prevent it from making “irrevocable changes” to its pension plans that could be deemed unnecessary.
Other faith-based health systems have already felt the financial weight of the changes. In May, a Trinity Health hospital paid $107 million to settle a class action over its ERISA pension obligations. In addition, St. Francis Hospital and Medical Center in Hartford, Conn., will add $17 million to its employee pensions and another $10 million over nine years. Ascension Health settled a similar case as well.
Advocate Health Care in Illinois and St. Peter's Healthcare System in New Jersey have also come under fire for not complying with ERISA. So far, federal appeals courts have sided with employees: Advocate lost its 7th Circuit appeal in March and the 3rd Circuit ruled against St. Peter's in December. Both cases have been appealed to the Supreme Court.
If the high court decides not to take up Dignity's appeal, the stay will expire and the system will be subject to ERISA. If the case is granted review, the stay will continue until the court rules on the appeal.