The U.S. Supreme Court gave a boost to two of Amy Blaisdell’s clients in 2017 — once by issuing a unanimous opinion, the other by doing nothing at all.
Blaisdell, an officer at Greensfelder, Hemker & Gale in St. Louis, was lead trial counsel in a case that determined what kinds of organizations count as “church plans” under the Employee Retirement Income Security Act.
That law, better known as ERISA, regulates retirement and pension plans. However, it exempts plans for the employees of churches and church-affiliated nonprofits. In Advocate Health Care Network v. Stapleton, the high court held that ERISA doesn’t require a church to have originally established the plan for the exemption to apply.
Blaisdell’s case arose from litigation over plans offered by Illinois-based Advocate Health Care Network, which runs numerous hospitals and health care facilities and is associated with the Evangelical Lutheran Church in America and the United Church of Christ. The Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation had long held that plans that were both established and that were maintained by religiously affiliated organizations qualified for the exemption.
The 7th U.S. Circuit Court of Appeals disagreed, holding that Advocate Health couldn’t claim the exemption and that a lawsuit against the company over alleged breaches of fiduciary duty could proceed. In separate cases, the 3rd and 9th Circuits similarly concluded that an organization that was merely affiliated with a church couldn’t establish an ERISA-exempt plan.
“Ultimately, I think the Supreme Court took it because it was a matter of such significance,” said Blaisdell, who briefed the case along with fellow Greensfelder attorneys Dan Schwartz and Heather Mehta. “For 30 years, the IRS had interpreted the exemption as extending to these religiously affiliated entities.”
Justice Elena Kagan’s June 5 opinion, which involved cases from all three circuits, held that the wording of the ERISA exemption was “a mouthful, for lawyers and non-lawyers alike,” but she concluded that Advocate and the other church-affiliated organizations did indeed have “church plans” that were exempt. As a result, Advocate Health and organizations like it couldn’t be taken to task for failing to comply with ERISA regulations.
The case was 8-0. Justice Neil Gorsuch, the court’s newest member, didn’t take part.
“It is interesting that you could have nine Court of Appeals judges go one way and then eight Supreme Court justices completely disagree,” Blaisdell said. Obviously, she added, she believes the Supreme Court got it right.
Justice Sonia Sotomayor concurred in Kagan’s interpretation but said she was “troubled by the outcome of these cases,” which left some large and profitable plans unregulated by ERISA.
Blaisdell, who focuses on employment and employee benefits litigation, noted that ERISA was intended to limit government entanglement with religious organizations.
“Regardless of size, these hospital systems are very intimately tied to the churches,” she said, noting that many of the plans follow socially responsible investment criteria that allow them to reinvest in their communities.
The underlying litigation remains pending in federal court in the Northern District of Illinois.
The Advocate Health case was the second of Blaisdell’s ERISA cases to reach the U.S. Supreme Court last year, though with a less dramatic conclusion. In January, the high court rejected an appeal of a woman’s challenge to the termination of her long-term disability benefits, which were administered through Ascension Health Alliance, which Blaisdell represented.
The plaintiff wanted the case brought in Arizona, but it was transferred to federal court in St. Louis under a forum selection clause in the contract. The Eastern Missouri district court said the forum selection clause was enforceable, and the U.S. Supreme Court declined to disturb that ruling. According to court records, the case settled shortly thereafter.