Case: Rollins v. Dignity Health

July 13, 2015—Church Alliance Files Amicus Curiae Brief

Background on Church Plan Litigation

A number of class-action lawsuits have been filed throughout the country in recent years, challenging the application of the church plan exemption from ERISA to certain plans established and maintained by church-affiliated organizations. Plaintiffs in these lawsuits allege that only churches (or conventions or associations of churches) are permitted to establish church plans. They argue that plans established by church affiliates, which are being treated as church plans, are in fact subject to, and in violation of, provisions of ERISA (including vesting, funding, reporting, and PBGC insurance premium requirements). These class action lawsuits have resulted in a split of decisions among federal district courts. Some courts have held for the plaintiffs, breaking from the long-standing interpretation that church plans include not only those that are established by churches, but also those that are sponsored by organizations that are affiliated with churches. Other courts have held that organizations affiliated with churches can establish and maintain a church plan. At least three of these cases have been appealed to the U.S. Courts of Appeals. The Third Circuit Court of Appeals recently held in favor of the plaintiffs in Kaplan v. St. Peter’s Healthcare System.

Rollins v. Dignity Health

The case Rollins v. Dignity Health is being appealed to the Ninth Circuit Court of Appeals. The issue in Rollins is the same as in the other church plan definition cases: whether employee benefit plans of a church-affiliated employer qualifies for church plan status, even if the plan is established by a church-affiliated employer and not by a church. At the district court level, the Northern District of California became the first court in this recent wave of church plan litigation to hold that only churches may establish church plans. The district court in Rollins addressed the pension plans sponsored by Dignity Health—a health care organization associated with the Roman Catholic Church. Dignity Health treated its pension plans as exempt from ERISA under the church plan exemption. The plaintiffs alleged that the pension plans were not eligible for the church plan exemption because Dignity Health was not a church. Dignity Health moved to dismiss the suit, arguing that its pension plans were entitled to church plan status due to Dignity Health’s church affiliation.

The district court denied the motion to dismiss, holding that only churches may establish church plans. The court stated that its ruling was based on a plain-meaning interpretation of the statute. In reaching its holding, the court contradicted decades of precedent, including the IRS’s long-standing interpretation of the statute.

Amicus Curiae Brief

Dignity Health is appealing this decision to the Ninth Circuit Court of Appeals. Because the plaintiffs in Rollins are also challenging the constitutionality of the church plan exemption, the Church Alliance joined an amicus curiae (friend of the court) brief, filed by GuideStone Financial Resources of the Southern Baptist Convention and The Pension Boards-United Church of Christ, Inc. (both of which are members of the Church Alliance). The joint brief argues, among other things, that the legislative history of the 1980 amendment to ERISA’s definition of church plan demonstrates that Congress intended to permit employee benefit plans of church-affiliated employers to have church plan status, even if the plans were established by a church-affiliated employer and not by a church. The brief also argues that the long-standing, broader interpretation of the definition of church plan, held by the IRS for decades, does not violate the establishment clause of the First Amendment of the US constitution.