{"id":32,"date":"2016-10-13T01:33:58","date_gmt":"2016-10-13T01:33:58","guid":{"rendered":"http:\/\/blogs.harvard.edu\/shailin\/?p=32"},"modified":"2017-09-18T01:35:45","modified_gmt":"2017-09-18T01:35:45","slug":"religious-hospitals-should-fully-fund-their-employees-pensions","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/shailin\/2016\/10\/13\/religious-hospitals-should-fully-fund-their-employees-pensions\/","title":{"rendered":"Religious Hospitals Should Fully Fund Their Employees\u2019 Pensions"},"content":{"rendered":"

Originally published on the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics\u00a0Bill of Health<\/a>\u00a0blog.<\/i><\/p>\n

In July, the\u00a0Ninth Circuit held<\/a>\u00a0that\u00a0Dignity Health<\/a>, a faith-based hospital system in the southwest United States, was not exempt from the employee pension requirements of the Employee Retirement Income Security Act (ERISA). The hospital system\u00a0decided in 1992<\/a>\u00a0that it would consider itself a church for the purposes of ERISA, and therefore would qualify for ERISA\u2019s church exemption and not have to provide fully funded or insured pensions for its employees. As a result of this decision, it underfunded its employees\u2019 pensions to the tune of\u00a0$1.2 billion<\/a>.<\/p>\n

The Ninth Circuit was the second to make such a ruling after the Seventh Circuit\u00a0issued a similar decision<\/a>\u00a0against Advocate Health Care in March. Many thought these rulings would lead the Supreme Court to\u00a0leave the issue alone<\/a>, but that may not be what SCOTUS has in mind. Associate Justice Anthony Kennedy recently\u00a0granted Dignity reprieve<\/a>\u00a0from complying with the Ninth Circuit decision while he and the other justices decide whether to hear the case. Hopefully, this signals that the Court\u00a0is planning to extend the Ninth Circuit\u2019s decision, ensuring that hospital systems with religious affiliations across the country fulfill their responsibilities to their employees and provide\u00a0them with the pensions they deserve.<\/p>\n

Dignity Health is not a church. While it did have an official relationship with the Catholic Church until 2012, at the end of the day Dignity Health is a medical services juggernaut. It is the\u00a0fifth-largest hospital system in the country<\/a>, with 39 acute care hospitals and over 250 ancillary facilities spread across Arizona, Nevada, and California. Its annual revenue is approximately\u00a0$10.5 billion<\/a>. It\u2019s so big that in 2012 it was included in an\u00a0antitrust investigation<\/a>\u00a0by the California Attorney General\u2019s Office to assess the impact of hospital consolidation on health care pricing in California.<\/p>\n

The arguments in court\u00a0centered on<\/a>\u00a0Dignity\u2019s relationship with the Catholic Church. Dignity argued that because it is a non-profit with a religious affiliation, its pension plans should be regarded as church plans.\u00a0The plaintiffs countered by arguing that Dignity is a hospital system \u2014 not a church \u2014 and that\u00a0it has acquired many non-religious hospitals which\u00a0perform procedures that\u00a0go against catholic\u00a0teachings. Both sides are trying to make sense of an opaque statute.\u00a0ERISA provides<\/a>\u00a0that an organization qualifies for the church plan exemption if it is \u201cassociated with a church..[and] shares common religious bonds and convictions,\u201d but it also notes that\u00a0plans are not\u00a0church plans if they are for the benefit of employees \u201cwho are employed in connection with\u2026unrelated trades or businesses.\u201d<\/p>\n

While these arguments make sense from a legal perspective, on a policy level they appear to miss the point. Whether or not Dignity Health has a strong association with the Catholic Church seems irrelevant to whether it should be able to underfund the pensions of its estimated\u00a056,000 employees<\/a>. The purpose of ERISA is to protect employees, and it\u2019s unclear why a nurse who works for a non-religious hospital is entitled to more protection than a nurse who works for Dignity Health simply because its board shares a set of religious beliefs.<\/p>\n

Furthermore, under the provision of ERISA on which Dignity relies, there is no requirement that the organization be a non-profit. Thus, taking Dignity\u2019s argument to the extreme, for-profit companies could avoid complying with ERISA\u2019s pension funding and disclosure requirements by establishing a relationship with a religious organization. In other words, Google could stop adequately funding the pensions of its 57,000 employees \u2014 saving billions of dollars \u2014 simply by finding religion.<\/p>\n

Fortunately, the federal courts that have heard the case have recognized the absurdity of this argument. The U.S. District Court for the District of Northern California\u00a0noted in its rejection of Dignity\u2019s position<\/a>\u00a0that \u201cto maintain a church plan, an organization must not only be associated with the church, but it must have [as] its \u2018principle purpose or function . . . the administration or funding of a [benefits] plan or program . . . for the employees of a church.\u2019\u201d Given that Dignity is not a church,\u00a0the court found that it should have to comply with ERISA like all the other hospital conglomerates that don\u2019t have spiritual proclivities.<\/p>\n

It seems as though the courts are getting this one right, but those decisions fail to reach many hospitals and medical centers across the country that continue to underfund pensions for their employees because of religious affiliations. We\u2019re talking hundreds of thousands of doctors, nurses, technicians, orderlies, and other staff members that don\u2019t have ERISA protection for their pensions because the hospitals for which these people\u00a0work think their religious connections exempt them from fulfilling their obligations as large-scale employers. Hopefully, the Supreme Court\u2019s decision to consider taking this case signals that this practice will soon come\u00a0to an end.<\/p>\n

The church exemption to ERISA exists for good reason. Faith-based organizations without avenues for generating revenue likely can\u2019t\u00a0fund and insure pensions for their employees in the way multi-national companies can, and they shouldn\u2019t be held to the same standards. But that doesn\u2019t mean a health care conglomerate with\u00a0over $10 billion in annual revenue should be able to shirk its responsibilities to its employees because it has a spiritual affiliation. \u00a0ERISA exists to protect employees, regardless of their employers\u2019 religious leanings, and it\u2019s time for that protection to be afforded to employees of religiously affiliated health care systems.<\/p>\n","protected":false},"excerpt":{"rendered":"

Originally published on the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics\u00a0Bill of Health\u00a0blog. In July, the\u00a0Ninth Circuit held\u00a0that\u00a0Dignity Health, a faith-based hospital system in the southwest United States, was not exempt from the employee pension requirements of the Employee Retirement Income Security Act (ERISA). The hospital system\u00a0decided in 1992\u00a0that it would consider itself […]<\/p>\n","protected":false},"author":8887,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-32","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/posts\/32","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/users\/8887"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/comments?post=32"}],"version-history":[{"count":1,"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/posts\/32\/revisions"}],"predecessor-version":[{"id":33,"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/posts\/32\/revisions\/33"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/media?parent=32"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/categories?post=32"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shailin\/wp-json\/wp\/v2\/tags?post=32"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}