Illinois Federal Judge: Church Plans Exempt From ERISA Regulations

According to reporting from Bloomberg BNA, Judge Staci M. Yandle has ruled in favor of OSF Healthcare System, a large not-for-profit Catholic healthcare corporation, in an ERISA lawsuit.

In the United States District Court for the Southern District of Illinois, Judge Yandle roundly rejected employees’ arguments that OSF Healthcare System was inappropriately relying on the ‘church plan’ exemption included in ERISA and that the exemption itself was unconstitutional.

In this post, our experienced Chicago ERISA litigation attorney provides a brief overview of the key facts of this case and reasoning behind the decision. Then we help to put this case into the broader legal context concerning religious-associated healthcare organizations and ERISA.

Case Analysis: Smith v. OSF Healthcare System

Background

The Employee Retirement Income Security Act contains a ‘church plan’ exemption. Employee benefit plans that are offered by qualified religious organizations are not required to comply with standard ERISA requirements, including some disclosure and funding regulations.    

Legal Issue

The plaintiffs in the cases, current and former employees of a Catholic-associated hospital, raised two legal arguments. First, they argued that their company, OSF Healthcare System, should not qualify under the exemption. Second, they argued that the exemption was itself illegal under the Establishment Clause, which prohibits the government from favoring a religion.

Decision

In her decision, Judge Yandle dismissed both arguments. Taking a similar position to an earlier case that was decided in the Tenth Circuit Court of Appeals, Judge Yandle declined to adopt a limited test in determining whether or not an organization is associated with a church for the purposes of ERISA.

The Supreme Court Paved the Way for Many Hospitals to Use this ERISA Exemption

In the key 2017 case of Advocate Health Care Network et al. v. Stapleton et al., the Supreme Court unanimously ruled that the ERISA ‘church plan’ exemption applied to certain plans that were not actually offered by churches. Specifically, many large hospitals and healthcare companies, which are often associated with the Catholic Church or other religious organizations, fit under this exemption. This has huge implications for employees and it has expanded the number of workers who are not protected by ERISA. In this case, Judge Yandle stated that she relied on the Advocate Health Care decision.

Contact Our Chicago ERISA Lawyer Today

At Bartolic Law, we have successfully represented clients in all aspects of ERISA claims and ERISA litigation. Our legal team fights tirelessly to help employees and beneficiaries get the full and fair benefits that they deserve.

To schedule a free, fully private review of your ERISA claim, please do not hesitate to contact us today by calling (312) 635-1600. With an office in Chicago, we handle ERISA claims throughout the region, including in Aurora, Naperville, Joliet, Evanston, Oak Brook, and Glencoe.