Advocate Health Care Network v. Stapleton

Background

Three church-affiliated nonprofit hospital systems offered defined-benefit pension plans that the hospitals themselves established and ran. Current and former employees sued, saying those plans must meet ERISA’s rules because they were not originally set up by a church. Federal agencies had long treated similar plans as exempt, but district courts and three federal appeals courts sided with the employees and required ERISA coverage.

Reasoning

The key question was whether a plan must have been originally established by a church to be exempt. The Court held that the statute’s 1980 amendment, which says a church-established-and-maintained plan “includes” plans maintained by certain church-associated organizations, brings those maintained plans within the exemption regardless of who first established them. The majority explained that “includes” was meant to extend the exemption, that Congress could have used different wording, and that interpreting the text as the employees urged would render words surplusage. The Court reversed the courts of appeals.

Real world impact

The ruling means many pension plans run by church-associated organizations can stay outside ERISA’s standard protections even if a church did not create them. That may leave affected employees without ERISA’s reporting, funding, and guarantee rules unless other facts require ERISA coverage. The Court did not decide whether the specific hospitals actually qualify as church-associated or whether their internal committees count as the kind of organizations covered; those questions remain for lower courts.

Dissents or concurrances

Justice Sotomayor joined the opinion but warned that the outcome could deny ERISA protections to many workers. She stressed the practical concern that large hospital systems operate like secular businesses, have for-profit units, and employ thousands, and that the legislative record does not clearly address today’s circumstances.