‘Religious’ hospitals not exempt from retirement regulations

The Third Circuit Court of Appeals ruled yesterday 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 earlier this year 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 church plan 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 submitted amicus briefs in similar cases before the Seventh and Ninth Circuits as well. FFRF briefs called the “church plan exemption” itself is unconstitutional under the First Amendment because it treats churches preferentially.

FFRF thanks former FFRF Legal Extern Jarvis Idowu for researching and drafting FFRF’s amicus briefs with staff attorneys Patrick Elliott and Andrew L. Seidel.

Freedom From Religion Foundation

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