High Court Struggles Over Hospital Pension Dispute

Legal Insight 2017/03/29 15:24   Bookmark and Share
The Supreme Court seemed to struggle on Monday over whether some of the nation's largest hospitals should be allowed to sidestep federal laws protecting pension benefits for workers.

Justices considered the cases of three church-affiliated nonprofit hospital systems being sued for underfunding pension plans covering about 100,000 employees. But the outcome ultimately could affect the retirement benefits of roughly a million employees around the country.

The hospitals — Advocate Health Care Network, Dignity Health and Saint Peter's Healthcare System — say their pensions are "church plans" exempt from the law and have been treated as such for decades by the government agencies in charge. They want to overturn three lower court rulings against them.

Workers suing the health systems argue that Congress never meant to exempt them and say the hospitals are shirking legal safeguards that could jeopardize retirement benefits.

"I'm torn," Justices Sonia Sotomayor said at one point during the hour-long argument. "This could be read either way in my mind."

Justice Anthony Kennedy said the Internal Revenue Service issued hundreds of letters over more than 30 years approving the hospitals' actions. That shows they were "proceeding in good faith with the assurance of the IRS that what they were doing was lawful," he said.

The case could affect dozens of similar lawsuits over pension plans filed across the country.

Much of the argument focused on how to read a federal law that generally requires pension plans to be fully funded and insured. Congress amended that law in 1980 to carve out a narrow exemption for churches and other religious organizations.

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