“I’m Torn”: Supreme Court Grapples With Hospital Pension Protections, Or Lack Thereof

The Supreme Court is struggling with the question of whether faith-affiliated hospitals should be exempt from federal rules protecting pension benefits for workers.

The ruling could affect up to a million workers’ retirement security.

Three church-affiliated hospitals are being sued for underfunding their respective pension systems; federal law requires most private organizations to keep their pension plans fully funded and insured with the PBGC.

But faith-based organizations are an exception to that rule.

But should they be? After three lower courts ruled against the hospitals, the interpretation of the law is now in the hands of the Supreme Court.

From the New York Times:

The hospitals — Advocate Health Care Network, Dignity Health and Saint Peter’s Healthcare System — say their pensions are “church plans” exempt from the law and have been treated as such for decades by the government agencies in charge. They want to overturn three lower court rulings against them.

Workers suing the health systems argue that Congress never meant to exempt them and say the hospitals are shirking legal safeguards that could jeopardize retirement benefits.

“I’m torn,” Justices Sonia Sotomayor said at one point during the hour-long argument. “This could be read either way in my mind.”

[…]

Hospital lawyer Lisa Blatt told the justices that Congress wanted to exempt plans associated with or controlled by a church, whether or not a church itself created the plan. She said federal agencies including the IRS and the Labor Department have assured them for decades that they are exempt.

Justice Elena Kagan said if Congress wanted a broader exemption, it used “very odd language” instead of being more straightforward.

Arguing for the workers, lawyer James Feldman said Congress was very zealous about creating exceptions to pension laws and did not intend to exempt these hospitals. He said the IRS letters wrongly interpreted the law and can’t be relied on.

“These plans have zero involvement with any church,” Feldman said.

A ruling might not come until summer.