The U.S Supreme Court Exempts Church-Affiliated Organization from the ERISA Law

The U.S Supreme Court recently made a ruling that exempts hospitals that are affiliated with churches from abiding by the federal law that manages employee pensions. This overturned a court decision that would have made the hospitals to pay billions of dollars. The Supreme Court gave an 8-0 ruling on the matter. The church-affiliated organizations will now not have to comply with the Employee Retirement Income Security Act, which is a law that was passed in 1974 to force private employers to abide by the rules that protect participants of the pension plans.

 

The court’s ruling came as a victory to the hospital that had been sued for claiming that they had a religious exemption that was offered by ERISA. These organizations include California’s Dignity Health, Illinois’ Advocate Health Care Network, and New Jersey’s Saint Peter’s Healthcare System. According to the law interpretation of most federal agencies, church plans and institutions that are affiliated with churches are exempted from the Employee Retirement Income Security Act. The employees of the hospitals accused them of being highly profitable businesses that had posed as church-affiliated organizations to avoid ERISA’s requirements.

 

Dignity Health manages Catholic and non-Catholic Hospitals, Saint Peter’s Healthcare System is linked to the Roman Catholic Church, and the Advocate Health Care Network is an affiliate of the Evangelical Lutheran Church and the United Church of Christ. Justice Elena Kagan ruled that the exemption that had been offered by the law covers institutions that were founded by churches and those that are linked to them. Justice Sonia Sotomayor supported her but said that some of the church-affiliated organizations run for-profit subsidiaries that make them billions of dollars. Such branches need to comply with the ERISA rules. According to Sotomayor, the U.S Congress needs to revise the laws. Hundreds of church-related hospitals across the United States had claimed that they are exempted from the ERISA law since 1980 when it was amended by the Congress to exclude all religious entities. The organizations could have been penalized hundreds of millions of dollars if the plaintiffs had won.