Advocate Health Care Network v. Stapleton
The Supreme Court ruled that church-affiliated hospitals' pension plans can qualify as exempt "church plans" under federal pension law even though the plans were created by the hospitals themselves rather than by a church.
The unanimous decision means these hospital systems and similar church-affiliated nonprofits do not have to follow ERISA's usual funding and disclosure rules, resolving a split among appeals courts and affecting pension coverage for tens of thousands of employees.
How it got here: Trial courts and the Third, Seventh, and Ninth Circuits all ruled for the employees, holding a church must establish a plan for it to be exempt; the hospitals appealed to the Supreme Court.
The Case in Depth
What happened
Three church-affiliated nonprofit hospital systems — Advocate Health Care, Saint Peter's Healthcare System, and Dignity Health — offered pension plans to their employees. The hospitals themselves created the plans, not any church, and internal committees managed them. Current and former hospital employees sued, arguing that because a church never established the plans, the plans could not qualify for ERISA's special "church plan" exemption and had to follow ERISA's normal pension protections.
The question before the Court
Does a pension plan have to be first set up by a church itself, or can a plan set up by a church-affiliated hospital still count as a tax-exempt "church plan" under federal pension law?
Why it matters
Employees at church-affiliated hospitals and similar nonprofits will not get the funding guarantees, disclosure requirements, and insurance protections that ERISA normally provides for private pension plans. Health systems avoid costly compliance obligations, but workers bear more risk if a plan is underfunded or mismanaged, since the usual federal safety net does not apply.
What changes now
This is a final merits decision, not a remand for further fact-finding on the core question. The Court reversed the appeals courts in all three cases, meaning the hospitals' pension plans are exempt from ERISA. The opinion leaves open separate disputes the lower courts didn't decide, such as whether these hospitals have sufficient church ties and whether their internal benefits committees truly count as qualifying organizations.
What this does not decide
The Court did not decide whether the hospitals actually have close enough ties to a church, or whether their internal benefits committees genuinely qualify as the kind of church-affiliated organizations the exemption requires. Those specific factual disputes were left unresolved for further proceedings, if any.
Concurrences and dissents
Concurrence — Justice Sotomayor
“That silence gives me pause: The decision to exempt plans neither established nor maintained by a church could have the kind of broad effect that is usually thoroughly debated during the legislative process and thus recorded in the legislative record.”Sotomayor's unease about the practical consequences of the ruling despite agreeing with its legal reasoning.
Justice Sotomayor agreed the statutory text compelled the majority's reading but voiced discomfort with the result. She noted that large church-affiliated hospital systems today often look and operate like ordinary secular businesses, run for-profit subsidiaries, and earn billions in revenue, making them very different from the small Catholic-Sisters-run plans Congress originally had in mind. She suggested Congress might address this modern reality differently if it revisited the issue.
How the Court got there
The legal reasoning, step by step
- The Court focused on the text of the 1980 amendment, which says a plan 'established and maintained by a church' now 'includes' a plan 'maintained by' a church-affiliated organization whose main job is running benefit plans for church-related employees.
- The Court read 'includes' here not as a literal addition but as a signal that the new category of plans gets the same exempt treatment as the original category, effectively letting the new phrase substitute for the old one entirely.
- Applying ordinary rules against treating statutory words as meaningless surplusage, the Court reasoned that if Congress wanted to touch only the 'maintained' requirement, it could have dropped the words 'established and' from the sentence — but it didn't, so both requirements were meant to be replaced together.
- The Court tested this reading against a hypothetical the employees offered (disability and veteran status) and explained why that analogy failed: establishment and maintenance of a pension plan are closely related concepts, unlike disability and veteran status, so treating them as a single combined requirement is far more plausible.
- Reviewing the competing historical accounts of why Congress passed the amendment, the Court found that both explanations — parity between churches and their affiliates, and parity between hierarchical and congregational churches — supported reading the exemption to cover plans never established by a church.