The Supreme Court appeared split along ideological lines over a case concerning the scope of pension benefits religiously-affiliated nonprofits are federally required to provide for their employees during arguments Monday.
The Employee Retirement Income Security Act (ERISA) sets minimum standards for all voluntary pension plans. Congress amended the law in 1980 to accommodate churches and religiously-affiliated nonprofits, which, for a variety of reasons, struggled to meet ERISA standards. The narrow carve-outs afforded to such groups in the law are referred to as “church plans.”
As originally written, the law provided that plans “established and maintained for its employees by a church” were exempt from the law. The 1980 amendment exempted plans “maintained by an organization…controlled by or associated with a church.”
Employees at three large hospitals affiliated with Christian denominations sued their employers, claiming Congress never exempted them from ERISA standards because they do not have a meaningful connection to a church. Should the employees succeed in their suit, almost a million pension plans could be affected, as religiously affiliated organizations with ERISA exemptions employ hundreds of thousands of workers around the country.
Three lower courts have found in favor of the employees in their suits against the hospitals. The Supreme Court consolidated all three cases into a single argument.
The hospitals argued that they have enjoyed ERISA exemption for several decades, pursuant to guidance from the agencies that administer the law. They say the high court should defer to the agencies’ conclusions regarding their ERISA status, as disregarding these policy decisions would be a major disruption to the national pension regulation regime. Hospital officials further argued that a ruling benefiting the workers would expose the hospitals to upwards of $66 billion in pension obligations.
“[T]he government’s consistent view, over three decades, has generated enormous reliance interests and warrants deference,” said Lisa Blatt, who represented the hospitals in the argument.
The issue of establishment also featured prominently in the argument. The hospitals argued it didn’t matter if their pension plans were established and maintained by a church — what the law requires, they said, is that such pension plans be maintained by an organization affiliated with a church.
James Feldman, who represented the workers, argued that many pension plans may be established by a religious congregation, but that the church itself has no involvement with the maintenance of the plan, or with the day-to-day operations of the organization it established the plan for.
“These plans have zero involvement with any church,” he told the justices.
Justice Sonia Sotomayor seemed especially dubious of the hospital’s arguments, and suggested that numerous corporate entities with loose affiliations to religious groups benefit from an unearned exemption.
“Do you believe that Congress’s vision was to let, what is essentially, a corporate entity opt out of protecting all of those employees?” she asked Blatt.
But she later conceded that the language at issue did not point towards a clear result.
“This could be read either way in my mind,” she told the lawyers for the workers, just as he approached the podium to begin his argument. “If I believe that, what do I go to, to break the tie?”
Blatt further argued that a ruling in the workers favor would have the effect of privileging institutionalized, hierarchical religions, like Catholicism, over disparate, decentralized religions like low-church Protestantism.
The U.S. government supported the hospitals in the litigation.
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