In the first decision among a number of such cases, the U.S. District Court for the Northern District of California noted that original ERISA language said a “church plan” was established and maintained by a church or by a convention or association of churches. An amendment later expanded the ability to maintain a church plan to an organization whose sole purpose was to maintain a plan for participants and beneficiaries of a church or association of churches. The court noted that the language saying a church plan is established by a church or association of churches remained in the amendment.
The court declined to defer to Internal Revenue Service (IRS) private letter rulings interpreting whether plans qualify as church plans exempt from ERISA, and said it is not persuaded by other court rulings, but by the principle Congress “says in a statute what it means and means in a statute what it says there.” In its opinion, the court pointed to minutes from a U.S. Senate committee meeting in June 1980 stating that Senator Herman E. Talmadge of Georgia explained to the Senate Finance Committee that the purpose of his proposal was to expand the church plan definition to include “church plans which rather than being maintained directly by a church are instead maintained by a pension board maintained by a church.” The court also cited other documentation that relayed Congress’ intent.
Judge Thelton E. Henderson concluded both the text and the history confirm that a church plan must still be established by a church. “Because Dignity [Health] is not a church or an association of churches, and does not argue that it is, the court concludes that Dignity does not have the statutory authority to establish its own church plan, and is not exempt from ERISA as a matter of law,” he wrote in his opinion. Henderson denied Dignity Health’s motion to dismiss.
Consequently, Henderson said he refrains from ruling on plaintiff Starla Rollins’s constitutional claim, which is premised on a finding that Dignity’s plan is exempt from ERISA. For the same reason, the court also declined to consider Dignity’s argument that its exemption from ERISA eliminates the court’s subject matter jurisdiction over the suit.
Dignity Health is one of five health care organizations facing a lawsuit challenging their pension plans’ “church plan” status. The U.S. government has intervened, saying it will decide when and if to address constitutionality claims depending on further developments in the cases (see “U.S. Intervenes in Church Plan Lawsuits”).
The opinion in Rollins v. Dignity Health is here.