Maria Stapleton v. Advocate Health Care Network
817 F.3d 517
7th Cir.2016Background
- Advocate Health Care Network (nonprofit hospital system, affiliated with Lutheran and United Church of Christ bodies but not a church) maintains a defined‑benefit pension plan covering most employees; Advocate did not comply with ERISA requirements, claiming the plan is exempt as a "church plan."
- Plaintiffs (current/former Advocate employees) sued as a putative class, alleging ERISA violations (improper vesting, underfunding, reporting failures, improper trust, etc.) and seeking reformation, penalties, and damages; alternatively they argued the church plan exemption is unconstitutional.
- District court denied Advocate’s motion to dismiss, holding the statutory definition requires a plan to be established by a church to qualify for the church‑plan exemption.
- The Seventh Circuit affirmed: ERISA’s church‑plan definition requires two separate elements — establishment and maintenance by a church — and subsection (33)(C)(i) only expands who may maintain a church‑established plan (e.g., pension boards), not who may establish it.
- Court rejected Advocate’s calls to defer to IRS private letter rulings and rejected arguments that the statute’s reading raises First Amendment problems; legislative history and plain text supported the narrow exemption.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Advocate’s pension plan qualifies as an ERISA "church plan" exemption | A plan qualifies only if it is both established and maintained by a church; Advocate’s plan was not established by a church | A plan is a "church plan" if it is maintained by a church‑affiliated organization — establishment by a church is not required | Held: Exemption requires the plan to be established by a church; (33)(C)(i) only expands who may maintain a church‑established plan |
| Proper interpretation of 29 U.S.C. §1002(33)(A) and (C)(i) | The plain language requires both "established" and "maintained" by a church; "includes" in (C)(i) does not eliminate establishment requirement | "Includes" in (C)(i) expands the exemption to plans maintained (and therefore effectively established) by church‑affiliated organizations | Held: Text and structure require both elements; giving (C)(i) narrower effect avoids rendering words superfluous |
| Persuasiveness of IRS private letter rulings favoring broader exemption | IRS rulings are not entitled to Chevron/strong deference and conflict with statutory text | IRS private letter rulings and GC memoranda support charitable/administrative reading | Held: IRS letters and GC memoranda are nonbinding, not persuasive here (Skidmore/Christensen); court relies on statute and legislative history |
| Constitutional challenges under the First Amendment | Plaintiffs argued the exemption privileges religion (Establishment Clause) | Advocate argued statutory construction improperly lets government define "church" and burdens religious autonomy | Held: Court did not reach merits of Establishment Clause claim because statutory ruling provided requested relief; rejected Advocate's constitutional worry as unpersuasive here |
Key Cases Cited
- Kaplan v. St. Peter’s Healthcare Sys., 810 F.3d 175 (3d Cir. 2015) (interpreting ERISA church‑plan definition; held hospital‑established plans do not qualify for exemption)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard — plausibility)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (pleading standard guidance)
- Russello v. United States, 464 U.S. 16 (1983) (inclusion/omission of words in different sections indicates congressional intent)
- Skidmore v. Swift & Co., 323 U.S. 134 (1944) (weight accorded agency interpretations depends on persuasiveness)
- Christensen v. Harris County, 529 U.S. 576 (2000) (less deference to agency opinions in informal formats)
- John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86 (1993) (courts read exemptions from comprehensive statutory schemes narrowly)
- Rapanos v. United States, 547 U.S. 715 (2006) (Congressional acquiescence to agency interpretation requires strong evidence)
- Brown v. Gardner, 513 U.S. 115 (1994) (statutory ambiguity and significance of conflicting administrative interpretations)
- Rollins v. Dignity Health, 19 F. Supp. 3d 909 (N.D. Cal. 2013) (district court concluding church‑affiliated hospital plans are not ERISA‑exempt)