If you are an employee participating in a pension plan, the federal Employee Retirement Income Security Act (“ERISA”) law makes sure your benefits will be there when you need them—except where ERISA does not apply. One of the few kinds of pension plans that is exempt from ERISA is the “church plan.” For years, Keller Rohrback has been representing employees in federal lawsuits against large healthcare companies that claim their pension plans are “church plans.” The lawsuits ask the federal courts to determine these are not “church plans” at all, force the employers to properly fund the plans, and give their employees the safety and security of all ERISA protections. The employees in the plans in the recent litigation all work for large healthcare organizations and their affiliates. These healthcare organizations are non-profit corporations, but they often have assets on par with Fortune 100 companies. As the Third Circuit recently observed in one of our cases, Kaplan v. Saint Peter’s Healthcare System, No. 15-1172 (3rd Cir. Dec. 29, 2015), “as of 2012 religiously affiliated hospitals accounted for seven of the country’s ten largest non-profit healthcare systems.” Workers for other kinds of private employers besides healthcare workers can be affected too—certain nonprofit entities such as universities and charities, even though they are not churches, sponsor private retirement plans that claim the benefit of the church plan exemption.
What is a church plan? Why do church plans exist?
Church plans have been around for a long time. Typically, a church plan is a pension plan that provides retirement income for clergy and other church employees. When Congress enacted ERISA in 1974, it exempted church plans because it felt that federal regulation might “be regarded as an unjustified invasion of the confidential relationship that is believed to be appropriate with regard to churches and their religious activities.” To meet the definition of a church plan the plan must meet several requirements; most important, it must be established by a church. However, the church plans that Keller Rohrback is suing over were not established by any church. They were established by nonprofit corporations.
How do I find out if my retirement plan is a church plan?
Your employer may provide you with some information about your benefits, but to determine whether the plan is claiming an exemption from federal ERISA laws as a church plan, you will need to ask the plan sponsor. In contrast, if your retirement plan is an ERISA plan, you have certain rights that will be prominently displayed and posted, and you have access to regular disclosures stating that the plan is an ERISA plan, and providing you with basic information about your plan and your benefits, including a summary plan description and a pension benefit statement.
Why does it matter if my retirement plan is a church plan?
Without ERISA, your pension may be at risk without you ever knowing it. If you are a participant in a defined benefit plan covered by ERISA, federal rules specify the amounts that employers are required to contribute on an annual basis so that your plan has enough money to pay you benefits when they are due. Further, through the federal Pension Benefit Guaranty Corporation (PBGC) participants are guaranteed a level of retirement benefits if for any reason the employer defaults on its obligation to pay benefits. In other words, in a plan covered by ERISA, your benefits are insured by the PBGC in the same way your balance in a federally insured bank account is insured by the FDIC. For employees in church plans, there are no such federal protections. Employees of church plans may also have to wait years longer than ERISA allows before they have a vested right to their retirement benefits. And participants in church plans are not even entitled to receive basic information about the plan, their retirement benefits, the plan’s funding status, and so on.
What are these cases about?
Simply put, these cases seek court orders that retirement plans established by hospital systems are employee benefit plans subject to ERISA and not “church plans.” Participants in these plans should be secure that, in compliance with federal law, their retirement plans are well-funded and insured, so that their benefits will be there when they need them. The problem is obvious when a church plan is underfunded, but it’s much more than that: if a plan is not subject to ERISA, there is no federal law requiring a sponsor to keep funding the plan, there is no federal law requiring participants to get timely and accurate information about the plan, and there is no pension benefit insurance if the plan can’t make payments.
What are my rights?
If you are a participant in a church plan, there are no federal pension laws or rules that specify how long you have to work to earn benefits, how or when the plan has to be funded, or what notices must be given to you. Church plans are governed only by the terms of the plan document, and the rights of employees and retirees are determined by state laws. State laws do not provide the same protections as federal law: that’s why ERISA was enacted in the first place. You can ask your employer for a copy of the plan document or other information about your benefits, but for church plan participants, there is no requirement that employers provide participants with copies of the plan document, or any other documents concerning their benefits.
Advocate Health Care Network
Ascension Health & Ascension Health Alliance
Bon Secours Health System, Inc.
Catholic Health East (“CHE”)
Dignity Health
Holy Cross Hospital
Hospital Sisters Health System (HSHS)
Mercy Health (fka Catholic Health Partners)
OSF HealthCare System
Presence Health Network
Providence Health & Services
St. Anthony’s Medical Center
St. Joseph’s Hospital & Medical Center & Subsidiaries
Saint Peter’s Healthcare System
SSM Health
Trinity Health Corporation (“Trinity”)
Wheaton Franciscan Services, Inc.
IMPORTANT: You may have other rights not described in this brief summary, and the rights of
plan participants may vary from state to state, from plan to plan, or even within a single plan.
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