‘Religious’ hospitals not exempt from retirement regulations

The Third Circuit Court of Appeals ruled Dec. 29 that large healthcare companies are not exempt from retirement plan regulations, even if they operate “religious” hospitals.

The Employee Retirement Income Security Act (ERISA) regulates retirement plans, but exempts church plans from requirements such as paying insurance premiums, meeting minimum funding standards and disclosing funding levels to plan participants.

FFRF filed an amicus brief in 2015 in the lawsuit contending that hospitals are not entitled to church privileges.

New Jersey’s Saint Peter’s Healthcare System employees filed class-action suits against their employers for claiming the church plan exemption. These large non-profit hospital systems have been able to contravene ERISA and underfund employees’ retirement plans by claiming the church exemption. The plaintiffs argued the employers are not churches, and are not operated or funded by religious organizations, so their employers should not be able to claim the exemption.

The district court ruled that Saint Peter’s could not use the exemption and the Third Circuit has agreed: “The plain terms of ERISA only make these exemptions available to plans established in the first instance by churches. Because St. Peter’s is not a church, the exemption is unavailable.”

FFRF briefs called the “church plan exemption” itself unconstitutional under the First Amendment because it treats churches preferentially.

Freedom From Religion Foundation