Supreme Court takes up hospital pension dispute

The Supreme Court will decide whether some of the nation’s largest health providers can rely on their church affiliations to avoid complying with federal laws covering pension benefits for workers.

The justices agreed Friday to take up cases involving three nonprofit hospital systems being sued for underfunding their employee pension plans. Lower courts ruled against the hospitals Dignity Health, Advocate Health Care Network and Saint Peter’s Healthcare System √¢¬Ä¬î saying their pensions do not qualify as “church plans” exempt from the law. That could force them and other hospitals to spend billions to make up funding shortfalls.

The hospitals argue that several federal agencies for years have assured them that they are in fact exempt. Workers have filed dozens of similar lawsuits over pension management across the country against hospitals affiliated with religious groups. The lawsuits argue that the hospitals are shirking legal safeguards that could mean losses of retirement benefits for tens of thousands of workers.

Pension plans must be fully funded and insured under federal law, but Congress carved out narrow exemptions for churches and other religious organizations. In the three cases taken up Tuesday, appeals courts in San Francisco, Chicago and Philadelphia have all ruled that the exemption applies only to plans that were established by a church.

The hospitals claim the law also exempts plans associated with or controlled by a church, whether or not a church itself created the plan. The Supreme Court in September temporarily blocked the ruling against Dignity Health from taking effect while justices decided whether to review the case. Workers suing the hospital say the pension plan is underfunded by $1.2 billion.

Dignity Health is the fifth-largest provider of health care in the country, employing more than 60,000 people. It formed from the merger of two Catholic hospital systems in California in 1986. Advocate Health Care Network is affiliated with the Evangelical Lutheran Church in America and the United Church of Christ. It employs about 30,000 people at twelve hospitals and more than 250 inpatient and outpatient health care sites in Illinois.

Saint Peter’s is owned by the Roman Catholic Diocese of Metuchen, New Jersey, and runs a hospital and other health care facilities employing more than 2,800 people. The cases are Advocate Health Care v. Stapleton, 16-74, Saint Peter’s Healthcare v. Kaplan, 16-86 and Dignity Health v. Rollins, 16-258. They will be argued in the spring.

This story has been corrected to note that the full Supreme Court, not only Justice Anthony Kennedy, temporarily blocked the Dignity Health ruling.