Supreme Court to decide whether church-affiliated hospitals can underfund pensions

The Supreme Court will decide whether some of the nation’s largest healthcare providers can rely on their church affiliations to avoid complying with federal laws covering pension benefits for workers.

The justices agreed Friday to take up cases involving three nonprofit hospital systems being sued for underfunding their employee pension plans.

Lower courts ruled against the hospitals — Dignity Health, Advocate Health Care Network and Saint Peter’s Healthcare System — saying their pensions do not qualify as “church plans” that are exempt from the law. That could force them and other hospitals to spend billions to make up funding shortfalls.

The hospitals argue that several federal agencies have assured them for years that they are exempt.

Workers have filed dozens of similar lawsuits over pension management nationwide against hospitals affiliated with religious groups. The lawsuits argue that the hospitals are shirking legal safeguards that could mean losses of retirement benefits for tens of thousands of workers.

Pension plans must be fully funded and insured under federal law, but Congress carved out narrow exemptions for churches and other religious organizations. In the three cases taken up by the Supreme Court, appeals courts in San Francisco, Chicago and Philadelphia have all ruled that the exemption applies only to plans that were established by a church.

The hospitals claim the law also exempts plans associated with or controlled by a church, regardless of whether a church itself created the plan.

In September, the Supreme Court temporarily blocked the ruling against Dignity Health from taking effect while justices decided whether to review the case. Workers suing the hospital say the pension plan is underfunded by $1.2 billion.

Dignity Health is the fifth-largest provider of healthcare in the country, employing more than 60,000 people. It formed from the merger of two Catholic hospital systems in California in 1986.

Advocate Health Care Network is affiliated with the Evangelical Lutheran Church in America and the United Church of Christ. It employs about 30,000 people at 12 hospitals and more than 250 inpatient and outpatient healthcare sites in Illinois.

Saint Peter’s is owned by the Roman Catholic Diocese of Metuchen, N.J., and runs a hospital and other healthcare facilities employing more than 2,800 people.

The cases will be argued in the spring.