Church-affiliated hospitals exempt from ERISA

On Behalf of | Jun 26, 2017 | ERISA Disability Benefits

A recent ruling from the U.S. Supreme Court is a major victory for all church-affiliated hospitals. The justices ruled 8-0 that such organizations are exempt from the Employee Retirement Income Security Act (ERISA), a law which is aimed at protecting pension plan participants.

The lawsuit stemmed from an employee suit which alleged certain church-affiliated health systems had wrongly claimed a religious exemption. Federal agencies had historically interpreted the law as exempting church plans as well as church-affiliated organizations such as hospitals, but these lawsuits challenged that interpretation and application.

Some justices opined that the Supreme Court ruling was required under the current applicable law.  Justice Sonia Sotomayor authored a separate opinion arguing Congress may need to review the law. In her opinion, the outcome bothered Justice Sotomayor. She acknowledged that some church-affiliated organization subsidiaries earn revenues on par with companies that must comply with ERISA. In addition, the opinion pointed out that many people may be denied ERISA protection that should receive it.

While the law continues – and affirms – federal agencies current practice, it does raise a legitimate challenge to continuing this exemption. Should Congress act to extend ERISA protection?

Among other news outlets, this Supreme Court opinion was covered by the Insurance Journal and Modern Healthcare. For more in depth coverage, review the SCOTUS blog about the ruling.