Summary of the Lawsuit
This lawsuit, filed in the United States District Court for the District of New Jersey (3:13-cv-02941), alleges that the non-profit healthcare corporation St. Peter’s Healthcare System (“St. Peter’s”) is violating numerous provisions of the Employee Retirement Income Security Act (“ERISA”), while wrongfully claiming that the St. Peter’s Health Care System Retirement Plan (“the Plan”) is exempt from ERISA’s protections because it is a “church plan.” The Plan was established in 1974 and operated in compliance with ERISA for more than thirty years before St. Peter’s claimed church plan exemption. This lawsuit seeks to compel St. Peter’s Health Care System Retirement Plan to comply with ERISA, and also seeks a declaration that the plan does not qualify for church plan exemption.
Summary of the Claims
The Complaint alleges that the Plan is not a “church plan” because ERISA only exempts pension plans established and maintained by a “church or a convention or association of churches,” and St. Peter’s, a healthcare corporation, does not qualify. The Complaint further alleges that St. Peter’s and plan fiduciaries (collectively “Defendants”) are violating ERISA by:
- underfunding the Plan by over $70 million;
- failing to furnish members of the proposed Class with Pension Benefit Statements, Summary Annual Reports, Notifications of Failure to Meet Minimum Funding, or Funding Notices; and
- failing to file an annual report with respect to the Dignity Health Pension Plans with the Secretary of Labor.
In addition, the lawsuit alleges that the church plan exemption, as claimed by St. Peter’s, is a violation of the Establishment Clause of the First Amendment of the Constitution because it harms St. Peter’s workers, puts St. Peter’s competitors at an economic disadvantage, and relieves St. Peter’s of no genuine religious burden.
This lawsuit is brought on behalf of all participants or beneficiaries of any Plan operated as or claimed by St. Peter’s to be a “church plan” as of the date of the filing of the Complaint.
Status of the Litigation
Plaintiffs filed their Complaint on May 7, 2013 in the United States District Court for the District of New Jersey. On August 12, 2013, Defendants filed a motion to dismiss the case, which was denied by the Court in a March 31, 2014 ruling. In this ruling, the Court sided with Plaintiffs, declaring that St. Peter’s Healthcare System Retirement Plan does not qualify for church plan exemption, as defined by the plain language of ERISA, because it was not established by a church or association of churches.
Defendants filed their Petition for Interlocutory Appeal in the Third Circuit Court of Appeals on September 29, 2014. The Third Circuit granted their appeal in a January 7, 2015 order. On December 29, 2015, The Third Circuit Court of Appeals affirmed the lower court’s ruling that St. Peter’s Healthcare System Retirement Plan is not a “church plan”. This decision is consistent with opinions from the Seventh and Ninth Circuits.
On July 18, 2016, Defendants filed a petition for a writ of certiorari, asking the Supreme Court to review the Third Circuit’s decision. The Supreme Court granted Defendant’s’ motion on December 2, 2016, and the case was consolidated with Rollins v. Dignity Health and Stapleton v. Advocate Health Care Network. Oral argument was held on March 27, 2017.
On June 5, 2017, the Supreme Court reversed the judgment of the Third Circuit Court of Appeals. Plaintiffs, as ordered by the Court, filed an amended complaint on August 8, 2018. Defendants then filed a motion to dismiss the amended complaint on September 6, 2018. The parties are awaiting a ruling on Defendants’ motion to dismiss.
On April 30, 2019, Judge Michael Shipp denied the Defendants Motion to Dismiss. Plaintiff’s claims will proceed.