Court Looks Beyond Simple Meaning of Church Plan

U.S. District Judge Robert E. Blackburn with the U.S. District Court for the District of Colorado has found that Catholic Health Initiatives (CHI) is a “church” for purposes of the Employee Retirement Income Security Act’s (ERISA’s) church-plan exemption.

The plaintiff in the case Medina v. Catholic Health Initiatives argued that the court should use the plain meaning of “church” as simply “a house of worship.” But, Blackburn said reliance on a plain meaning interpretation ignores other plain meanings of the term “church,” which evince richer and more meaningful denotations and connotations of that term. He said it is equally plain that the term “church” can and may be used to denote “the whole body of Christian believers,” or “any division of this body professing the same creed and acknowledging the same ecclesiastical authority,” as well as an “ecclesiastical organization, power, and affairs, as distinguished from the state.”                           

Blackburn found these broader conceptions of the term find parallels in definitions of the Roman Catholic Church in particular. “Under this more resonant definition, the court has little trouble in concluding that CHI is, at the very least, a constituent part of the Catholic Church,” he wrote in his opinion.

Investigating the history of CHI, Blackburn found that in June 1991, the Congregation for Institutes of Consecrated Life and Societies of Apostolic Life, a department of the Holy See in the Vatican, approved a petition to confer public juridic personality on Catholic Health Care Federation (CHCF). The opinion explains that public juridic persons are the official constitutive parts of the Catholic Church and the primary means through which the Church acts in the world. However, they are creatures of canon law, and thus have no ability to act or own property in the United States on their own. To do so, they require a civil law counterpart.

CHI was formed in 1996 through the consolidation of three health care systems representing 10 congregations of Catholic sisters. It is expressly “organized and operated . . . exclusively for the benefit of, to perform the functions of, and/or to carry out the religious, charitable, scientific, and educational purposes . . . of Catholic Health Care Federation.”  In other words, Blackburn said, “as conceived by the Church itself, CHCF and CHI are seen as the church and civil counterparts of a single entity.”

In addition, Blackburn noted, CHI is listed in The Official Catholic Directory, “the definitive compilation of Roman Catholic institutions in the United States.”  And, in an Internal Revenue Service General Counsel Memorandum in July 1, 1983, the agency said, “[a]ny organization listed in [The Official Catholic Directory] is considered associated with the Roman Catholic Church in the United States,” and an employee of any such organization “is considered as an employee of the Roman Catholic Church of the United States for purposes of the church plan rules.” 

Blackburn also found CHI’s ties to the Catholic Church extend downward to its defined benefit plan subcommittee, which manages and administers the plan. All members of the subcommittee are appointed by CHI’s governing body, the Board of Stewardship Trustees (BOST). All expenses of plan administration are paid by CHI.

In administering the plan and carrying out its duties, a document governing the subcommittee says it must “be mindful of the Employer’s Philosophy and Mission, and the teachings and tenets of the Roman Catholic Church and of the Sponsoring Congregations of Catholic Health Initiatives.” Blackburn says this shows the subcommittee plainly is “associated” with the Catholic Church.

He concluded that CHI is a church for purposes of ERISA section 1002(33)(A), because the evidence more than adequately demonstrates that the CHI Plan satisfies the requirements of section 1002(33)(C), which says a plan may qualify for the church-plan exemption if it is “maintained by an organization, whether a civil law corporation or otherwise, the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches.”

A number of lawsuits have challenged retirement plan’s church-plan status. The courts have issued differing opinions in the cases. The three cases finding against “church plan” status for the defendants have appealed to the 9th, 3rd, and 7th Circuits. In the Medina case, Blackburn rejects a recommendation by a U.S. magistrate judge that the court enter a declaratory judgment holding that the CHI Retirement Plan is not a church plan within the meaning of ERISA, as well as a declaratory judgment holding that the CHI Plan must comply with ERISA, to the extent that it currently does not comply.