U.S. Supreme Court: ERISA “Church Plan” Exception Applies to Any Benefit Plan Maintained by Certain Church-Associated Organizations

Giving a major win to several religiously-affiliated health care systems, the United States Supreme Court unanimously held on June 5 that pension plans maintained by certain church-associated organizations qualify as ERISA-exempt “church plans,” whether or not a church first established the plans. Advocate Health Care Network v. Stapleton, No. 16-74 (June 5, 2017). Plaintiffs around the country have alleged that pension plans for employees of several hospitals were not exempt “church plans” because the statutory definition requires that such plans be “established and maintained . . . by a church.” ERISA was amended to state that a plan “established and maintained . . . by a church” includes a plan maintained by a so-called “principal-purpose organization” controlled by or associated with a church which has as its principal purpose the administration or funding of the plan. The court interpreted this amendment to mean that plans maintained by such “principal-purpose organizations” are exempt from ERISA even if the plans were not originally established by a church.

The court was not asked to determine whether the hospitals in the cases at issue have close enough ties to churches for their internal benefits committees to qualify as “principal purpose” organizations. Plaintiffs can be expected to raise this issue in the dozens of “church plan” cases pending throughout the country, and we may see these cases make their way back to the U.S. Supreme Court in the coming years.