A trial court docket has reconsidered whether or not a church-affiliated hospital’s retirement plan was a church plan exempt from ERISA’s funding and different necessities, reaching a special conclusion this time. As background, ERISA’s church plan exemption gives {that a} plan “established and maintained” by a church features a plan “maintained” by a principal-purpose group—a corporation managed by or related to a church, the principal objective of which is administering a plan that gives advantages for workers of a church or a church-affiliated nonprofit. Beforehand, this trial court docket and an appellate court docket concluded that the hospital’s plan was not a church plan as a result of it had not been established by a church (see our Checkpoint article). However the U.S. Supreme Court docket subsequently dominated that church plans might embody plans established (not merely maintained) by church-affiliated organizations (see our Checkpoint article). The trial court docket reconsidered the plan’s standing in gentle of that ruling.

The court docket first defined the hospital’s company construction and the connection among the many hospital, the plan’s administrative committee, and the Roman Catholic church, noting that the bishop of the diocese that owned the hospital had “nearly unfettered discretion” over hospital enterprise, together with important management over the retirement plan committee. The court docket then utilized a three-step evaluation developed by the Tenth Circuit following the Supreme Court docket’s ruling, asking whether or not the employer plan sponsor was related to a church, whether or not the plan was maintained by a principal-purpose group, and whether or not the principal-purpose group was related to a church. It concluded that the hospital was related to the church based mostly largely on its company kind and inclusion within the Official Catholic Listing, the “definitive compilation” of U.S. Roman Catholic establishments. As a result of the committee had general duty for plan oversight, together with ultimate authority over profit claims and duty for plan belongings and investments, it was a principal-purpose group that maintained the plan. The court docket rejected the argument that solely the entity with the authority to amend and terminate the plan (the employer) “maintains” a plan, concluding that this plan was maintained by each the employer and the committee. And the committee was related to the church as a result of it was a subpart of the church-affiliated hospital and was underneath the bishop’s supervision. Thus, the hospital’s plan was a church plan exempt from ERISA.

EBIA Remark: Unsurprisingly, making use of the Supreme Court docket’s ruling yields a broader church plan definition—welcome information for church-affiliated entities which have lengthy handled their worker profit plans as exempt from ERISA. For extra data, see EBIA’s 401(okay) Plans guide at Part II.B.3 (“Exemption for Church Plan”), EBIA’s ERISA Compliance guide at Part V.D (“Exemption for Church buildings”), EBIA’s Self-Insured Well being Plans guide at Part III.D.5 (“Plans Sponsored by Spiritual Organizations”), and EBIA’s Cafeteria Plans guide at Part VIII.D (“Cafeteria Plans Sponsored by Church buildings”).

Contributing Editors: EBIA Employees.