Sally Sanzone v. Mercy Health, 954 F.3d 1031

Background

Mercy Health is a large, Catholic-affiliated nonprofit hospital system; Sanzone worked there ~25 years and participated in the Sisters of Mercy retirement plan (the Plan).
The Plan was materially underfunded and allegedly lacked ERISA-required funding, reporting, notice, and PBGC insurance protections.
Mercy asserts the Plan is a "church plan" exempt from ERISA under 29 U.S.C. § 1002(33), pointing to a Mercy Health Benefits Committee (five members; four are Sisters) that allegedly administers and has discretionary powers over the Plan.
The district court dismissed, finding the Plan was a church plan (thus no ERISA jurisdiction) and that Sanzone lacked Establishment Clause standing; state claims were dismissed without prejudice.
On appeal the Eighth Circuit addressed (1) whether ERISA coverage is jurisdictional or a merits element, (2) whether the Committee qualifies as a principal-purpose organization that "maintains" the Plan, and (3) standing to challenge the church-plan exemption under the Establishment Clause.
The court held ERISA coverage is a merits element, concluded the Committee (as alleged) both "maintains" the Plan and is an "organization" so the Plan is a church plan (affirming dismissal of ERISA claims), but remanded the Establishment Clause standing question to the district court.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ERISA coverage (church-plan status) is jurisdictional	Sanzone: Arbaugh requires treating coverage as a merits element, not jurisdictional	Mercy: prior Eighth Circuit authority treated coverage as jurisdictional	Court: Arbaugh controls; coverage is a merits element (not jurisdictional)
Whether the Committee "maintains" the Plan	Sanzone: "maintain" requires ultimate responsibility (adopt/modify/terminate); committee lacks that, so it does not maintain	Mercy: ordinary meaning "maintain" (care for/continue) applies; committee’s alleged powers show it maintains the Plan	Court: applied ordinary meaning; allegations show committee "cares for/continues" the Plan — so it maintains the Plan
Whether the Committee is an "organization" (principal-purpose organization)	Sanzone: ordinary meaning too broad; Congress intended a narrower, independent body with principal purpose of administering plans	Mercy: committee is an organized body working together for a common purpose and meets ordinary meaning	Court: ordinary meaning controls; committee (structure and duties as alleged) is an organization and thus a principal-purpose organization
Standing to challenge church-plan exemption under Establishment Clause	Sanzone: deprivation of ERISA protections (funding rules, PBGC insurance, notice) is a concrete, redressable injury	Mercy/District Ct.: alleged underfunding and risk are hypothetical; no imminent injury, so no standing	Court: district court did not address deprivation-of-protections argument; remanded to determine Article III standing and, if present, merits of Establishment Clause challenge

Key Cases Cited

Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652 (2017) (Supreme Court’s discussion of the principal‑purpose provision and its interpretation; left open whether hospital committees qualify)
Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (framework distinguishing jurisdictional limitations from merits elements)
Medina v. Catholic Health Initiatives, 877 F.3d 1213 (10th Cir. 2017) (hospital benefits committee found to qualify as a principal‑purpose organization under ordinary‑meaning approach)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requirements: injury‑in‑fact, causation, redressability)
Chronister v. Baptist Health, 442 F.3d 648 (8th Cir. 2006) (prior Eighth Circuit decision treating church‑plan status in analysis; discussed as dicta here)
Dakota, Minnesota & Eastern R.R. v. Schieffer, 711 F.3d 878 (8th Cir. 2013) (prior Eighth Circuit treatment of ERISA plan issues; discussed as not squarely resolving jurisdictional question)