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St. Peter's Healthcare v. Kaplan

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Supreme Court of the United States
St. Peter's Healthcare v. Kaplan
Reference: 16-86
Issue: ERISA
Term: 2016
Important Dates
Argued: March 27, 2017
Decided: June 5, 2017
Outcome
Third Circuit Court of Appeals reversed
Vote
8-0 to reverse
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan
Concurring
Sotomayor


St. Peter's Healthcare v. Kaplan is a case argued during the October 2016 term of the U.S. Supreme Court. Argument in the case was held on March 27, 2017. The case came on a writ of certiorari to the United States Court of Appeals for the 3rd Circuit and the court consolidated arguments in the case with arguments in Advocate Health Care v. Stapleton and Dignity Health v. Rollins. On June 5, 2017, in a unanimous opinion authored by Justice Elena Kagan, the court reversed the judgment of the Third Circuit Court of Appeals. Justice Sonia Sotomayor authored a concurring opinion in the case.

In the case, the court held that retirement plans maintained by church-affiliated organizations need not have been initially established by a church in order to be exempt from certain requirements under the Employee Retirement Income Security Act (ERISA).

HIGHLIGHTS
  • The case: A federal law, the Employee Retirement Income Security Act (ERISA), provides exemptions from certain requirements for retirement plans established and maintained by a church (church plans). Subsequent provisions in the law extend ERISA's exemptions to church plans established by a church but maintained by church-affiliated organizations.
  • The issue: Do ERISA's exemptions apply to church plans both established and maintained by church-affiliated organizations?
  • The outcome: On June 5, 2017, the court reversed the judgment of the Third Circuit Court of Appeals.


    • In brief: This case was one of three cases consolidated for argument addressing provisions under the Employee Retirement Income Security Act (ERISA). ERISA provides exemptions from certain requirements for retirement plans established and maintained by a church (church plans). Subsequent provisions in the law extend ERISA's exemptions to church plans maintained by church-affiliated organizations. In three separate cases, three-judge panels of the Third Circuit Court of Appeals, the Seventh Circuit Court of Appeals, and the Ninth Circuit Court of Appeals rejected arguments that ERISA's exemptions apply to plans that were both established and maintained by church-affiliated organizations. Argument in the cases were held on March 27, 2017.

    You can review the Third Circuit's opinion here.[1]

    Here are our pages on the consolidated cases: Advocate Health Care v. Stapleton and Dignity Health v. Rollins.

    Click on the tabs below to learn more about this Supreme Court case.

    Case

    Background

    This was one of three cases consolidated for argument. These cases addressed requirements under the Employee Retirement Income Security Act (ERISA) that pertain to retirement plans maintained by church-affiliated organizations.

    ERISA establishes reporting requirements for employee retirement plans. Subsection 4(b)(2) of ERISA provides an exemption from some of these requirements for retirement plans established and maintained by a church. The relevant provisions of ERISA under review in the consolidated cases were subsection 33(A) and subsection 33(C)(i) of the law. These provisions are codified as 29 U.S.C. §1002(33)(A) and (33)(C)(i).

    Section 29 U.S.C. §1002(33)(A) reads as follows:[2]

    “

    The term 'church plan' means a plan established and maintained (to the extent required in clause (ii) of subparagraph (B)) for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under section 501 of title 26. [3]

    		”

    Section 29 U.S.C. §1002(33)(C)(i) reads as follows:[2]

    “

    A plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches includes a plan maintained by an organization, whether a civil law corporation or otherwise, the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches. [3]

    		”

    Under 33(A), two separate elements of a retirement plan must be met in order for ERISA's exemption for church plans to apply: the church, as defined by ERISA, must create or establish the plan and then maintain the plan. Section 33(C)(i) extended the exemptions to plans maintained by church-affiliated organizations.[4]

    In an opinion by Judge Ilana Rovner of the United States Court of Appeals for the 7th Circuit, she outlined the statute and the positions of each party in Advocate Health Care v. Stapleton. Those positions are parallel to the positions in this case and in Dignity Health v. Rollins. Judge Rovner wrote,[4]

    “
    • The statute simplified: A church plan includes a plan maintained by a church affiliated organization.
    • Advocate’s position on what this means: A plan established and maintained by a church includes a plan established by a church-affiliated organization (and maintained by either a church or a church affiliated organization).
    • The plaintiffs’ position: A plan established and maintained by a church also includes a plan established by a church but maintained by a church-affiliated organization.

    [3]

    		”

    The question in each of these cases was whether a plan both established and maintained by a church-affiliated organization can qualify for ERISA's exemptions for church plans. In each of the consolidated cases, the appellate panel held that plans established and maintained by a church-affiliated organization cannot qualify for the church plan exemptions under ERISA. In short, a church must establish a plan in order to qualify for ERISA exemptions and this is true even if a church-affiliated organization maintains the plan on behalf of the church.

    Petitioner's challenge

    St. Peter's Healthcare, the petitioner, challenged the holding of the United States Court of Appeals for the 3rd Circuit that St. Peter's plan does not qualify for the same exemptions to which church plans are eligible under ERISA.

    Certiorari granted

    On July 18, 2016, St. Peter's Healthcare, the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 3rd Circuit. The U.S. Supreme Court granted St. Peter's certiorari request on December 2, 2016, and the court consolidated the case with arguments in Advocate Health Care v. Stapleton and Dignity Health v. Rollins. Arguments in these cases were held on March 27, 2017.

    Arguments


    Question presented

    Question presented:

    "The Employee Retirement Income Security Act of 1974 ('ERISA"') governs employers that offer pensions and other benefits to their employees. "Church plans" are exempt from ERISA's coverage. 29 U.S.C. §§ 1002(33), 1003(b)(2). For over thirty years, the three federal agencies that administer and enforce ERISA-the Internal Revenue Service, the Department of Labor, and the Pension Benefit Guaranty Corporation-have interpreted the church plan exemption to include pension plans maintained by otherwise qualifying organizations that are associated with or controlled by a church, whether or not a church itself established the plan.
    The question presented is whether the church plan exemption applies so long as a pension plan is maintained by an otherwise qualifying church-affiliated organization, or whether the exemption applies only if, in addition, a church initially established the plan."[5]


    Audio

    • Audio of oral argument:[6]



    Transcript

    • Transcript of oral argument:[7]

    Outcome

    Decision

    Justice Elena Kagan delivered the opinion of the court. Justice Sonia Sotomayor authored a concurring opinion. In the case, the court held that retirement plans maintained by church-affiliated organizations need not have been initially established by a church in order to be exempt from certain requirements under the Employee Retirement Income Security Act (ERISA).[8]

    Opinion

    In her opinion for the court, Justice Kagan clarified how ERISA's requirements did not extend to retirement plans established by church-affiliated organizations as well as those established by a church. She wrote,[8]

    “

    Because Congress deemed the category of plans 'established and maintained by a church' to 'include' plans 'maintained by' principal-purpose organizations, those plans—and all those plans— are exempt from ERISA’s requirements. Had Congress wanted, as the employees contend, to alter only the maintenance requirement, it had an easy way to do so—differing by only two words from the language it chose, but with an altogether different meaning. Suppose Congress had provided that 'a plan maintained by a church includes a plan maintained by' a principal-purpose organization, leaving out the words 'established and' from the first part of the sentence. That amendment would have accomplished exactly what the employees argue Congress intended: The language, that is, would have enabled a principal-purpose organization to take on the maintenance of a 'church plan,' but left untouched the requirement that a church establish the plan in the first place. But Congress did not adopt that ready alternative. Instead, it added language whose most natural reading is to enable a plan 'maintained”' by a principal-purpose organization to substitute for a plan both 'established' and 'maintained' by a church. That drafting decision indicates that Congress did not in fact want what the employees claim.[3]

    		”

    Based on this rationale, the court reversed the contrary holding of the Third Circuit Court of Appeals.

    Concurring opinions

    In a concurring opinion, Justice Sonia Sotomayor noted that she joined the court's opinion because she believed the statutory text was interpreted correctly however, as she acknowledged, the case prompted some concern. She wrote,[8]

    “

    ...I am nonetheless troubled by the outcome of these cases. As the majority acknowledges ... the available legislative history does not clearly endorse this result. 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. And to the extent that Congress acted to exempt plans established by orders of Catholic Sisters ... it is not at all clear that Congress would take the same action today with respect to some of the largest health-care providers in the country. Despite their relationship to churches, organizations such as petitioners operate for-profit subsidiaries ... earn billions of dollars in revenue ... and compete in the secular market with companies that must bear the cost of complying with ERISA. These organizations thus bear little resemblance to those Congress considered when enacting the 1980 amendment to the church plan definition. This current reality might prompt Congress to take a different path.[3]

    		”

    Dissenting opinions

    There were no dissenting opinions filed in this case.

    The opinion


    Filings

    The U.S. Supreme Court granted St. Peter Healthcare's certiorari request on December 2, 2016.

    Merits filings

    Parties' briefs

    • The petitioners in the consolidated cases filed a merits brief on January 17, 2017.
    • The respondents in the consolidated cases filed a merits brief on February 16, 2017.

    Amicus curiae briefs

    The following groups filed amicus curiae briefs in support of the petitioners in the consolidated cases:

    • Brief of the Alliance Defending Freedom and the Thomas More Society
    • Brief of the American Center for Law and Justice
    • Brief of the Becket Fund for Religious Liberty
    • Brief of the Catholic Health Association et al.
    • Brief of the Christian Legal Society et al.
    • Brief of Church Defendant
    • Brief of the Council for Christian Colleges and Universities
    • Brief of the General Conference of Seventh-Day Adventists
    • Brief of the Illinois Conference of the United Church of Christ
    • Brief of St. Elizabeth Medical Center, Inc.
    • Brief of the U.S. Conference of Catholic Bishops
    • Brief of the United States of America

    The following groups filed amicus curiae briefs in support of the respondents in the consolidated cases:

    • Brief of Americans United for the Separation of Church and State
    • Brief of the AARP and the AARP Foundation
    • Brief of the National Employment Lawyers Association
    • Brief of the Pension Rights Center
    • Brief of Professor Daniel Halperin

    Certiorari filings

    Parties' filings

    • St. Peter's Healthcare, the petitioner, filed a petition for certiorari on July 18, 2016.
    • Laurence Kaplan et al, the respondents, filed a brief in opposition to certiorari on September 16, 2016.

    Amicus curiae filings

    The following groups filed amicus curiae briefs in support of granting certiorari:

    • Brief of the Alliance Defending Freedom
    • Brief of the Becket Fund for Religious Liberty
    • Brief of the Catholic Health Association
    • Brief of the Thomas More Society

    See also

    Footnotes

    1. ↑ U.S. Court of Appeals for the Third Circuit, Laurence Kaplan et al v. Saint Peter's Healthcare System et al., filed December 29, 2015
    2. ↑ 2.0 2.1 Cornell University's Legal Information Institute, "29 U.S. Code § 1002 - Definitions," accessed March 20, 2017
    3. ↑ 3.0 3.1 3.2 3.3 3.4 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    4. ↑ 4.0 4.1 Cite error: Invalid <ref> tag; no text was provided for refs named Seventh
    5. ↑ Supreme Court of the United States, St. Peter's Healthcare v. Kaplan, December 2, 2016
    6. ↑ Supreme Court of the United States, Advocate Health Care Network v. Stapleton, argued March 27, 2017
    7. ↑ Supreme Court of the United States, Advocate Health Care Network v. Stapleton, argued March 27, 2017
    8. ↑ 8.0 8.1 8.2 Supreme Court of the United States, Advocate Health Care Network et al. v. Stapleton et al., decided June 5, 2017
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