December 21, 2016: Lawsuits similar to one filed against Adventist Health System have been filed against three religious hospital systems’ pension plans and have reached the Supreme Court.
ReligiousLiberty.TV reports that the Supreme Court agreed to hear the cases (Advocate Health, Dignity Health, and St. Peter’s Healthcare System) involving the hospital systems’ pension plans and whether they should be subject to the Employee Retirement Income Security Act of 1974 (ERISA) federal pension funding regulations. The cases will be heard together at a date that remains to be set.
ERISA protects employees from employer underfunding of pension plans as well as cases where employees lose their pensions when their employers go out of business.
The complicating issue is that churches, as well as organisations like hospitals started by religious institutions, are exempt from ERISA. Consequently, pension plans offered by networks like Adventist Health System operate on an honor system, which can lead to underfunding of plans.
Perceived flaws in pension plans are of obvious concern to plan beneficiaries and have led to the lawsuits against the hospital system cases being heard by the US Supreme Court.
In the cases involving Advocate Health, Dignity Health, and St. Peter’s Healthcare System, the systems have already lost at the Third, Seventh, and Ninth Circuit Courts of Appeal.
In the event that the Supreme Court upholds the decisions of the lower courts, faith-based hospitals could be forced to pay millions to bring their pension plans up to the standard of employers that are not ERISA exempt.
Adventist Health System was recently hit with a similar class-action lawsuit in Florida federal court, accused of underfunding its pension plan by $134 million. The plaintiffs claim that the system is a business, not a church, and should therefore comply with ERISA regulation.
Adventist Health System has countered that the network is church-related and as such is not subject to ERISA rules. Further, the system said that its pensions were already correctly funded.
The Florida case against Adventist Health System is expected to wait pending the result of the related cases in the Supreme Court.