By Kelsey Dallas

Deseret News via the Associated Press

A Supreme Court case about retirement benefits could hold surprising consequences for America’s religious communities. In parsing the legal language, justices may need to redefine what counts as a church.

Advocate Health Care Network v. Stapleton centers on what types of employers are considered religious — or at least religiously affiliated — under Internal Revenue Service pension rules. The petitioners, a group of three religiously affiliated health care systems, argue that they are eligible to run church plan pensions, which are exempt from the Employee Retirement Income Security Act. An ERISA exemption means the hospitals don’t have to report pension savings to the government or pay related premiums.

But these exemptions concern the health care systems’ employees because their church pensions plans — which they say are underfunded by around $4 billion — aren’t protected by the ERISA safety net. The workers who initiated the Supreme Court case assert that the church plan exemption shouldn’t include pension plans that weren’t established by a faith group, rejecting the IRS’s interpretation of “church” as overly broad.

Monday’s arguments included general observations on the difficulty of working with decades-old legal language, as well as a long exchange between Justice Stephen Breyer and one of the employees’ lawyers about the problem with trying to establish a set definition of “church.”

“The Catholic Church establishes the plan and (a group of nuns) maintains it. On your definition, is it in or out?” Breyer said.

“I thought the whole purpose (of ERISA amendments) was to avoid that inquiry,” added Chief Justice John Roberts.

Advocate Health Care Network v. Stapleton has been in the media spotlight because of the billions of dollars the hospitals would need to spend to comply with ERISA if they lose. But the case also deserves attention for the potential legal ramifications for religiously affliated schools, charities and other organizations of limiting the definition of “church” in the eyes of the government, said Eric Rassbach, deputy general counsel at Becket, a religious liberty focused law firm that wrote an amicus brief in favor of the health care systems.

Religiously affiliated organizations like hospitals and schools shouldn’t suffer simply because their main mission isn’t to host worship services, he told the Deseret News, noting that “for many religious people, religion is not just something they do when they’re inside a sanctuary.”
ERISA’s religion problem

ERISA, passed in 1974, sparked a religious outcry from the beginning. Faith groups protested the law’s stark division of churches and church-related social programs, arguing that it drew a false boundary around worshiping communities.

“The original (law) said it has to be a plan established by a church for church employees, not employees of church-affiliated agencies like hospitals and schools,” said Norman Stein, an expert on pension law at Drexel University in Philadelphia.

As religious leaders predicted, this distinction created legal headaches right away. The IRS, in considering requests for the church plan exemptions, had to decide what counted as a church, and their definition left out an order of nuns that ran a nursing home because the nuns didn’t hold worship services, Stein said.

Policymakers were sympathetic to faith groups’ complaints, and they amended ERISA in 1980 to expand the definition of church plans. Now, the term included any pensions “established and maintained” by a religious institution.

The IRS “interpreted the 1980 amendments as authorizing a church-related agency to maintain a church plan, so long as the agency’s plan had an administrative committee comprised of a majority of members of the same faith as the affiliated church or if the agency’s plan was ‘controlled by a church,’” according to a 2014 newsletter from the American Bar Association.