326 F. Supp. 3d 795
E.D. Mo.2018Background
- Mercy Health is a large 501(c)(3) Catholic healthcare system that sponsors the Mercy Health MyRetirement Personal Pension Account Plan (the Plan), with >40,000 participants; the Mercy Health Benefits Committee is the Plan Administrator.
- The Plan traces to a Sisters of Mercy retirement plan, is explicitly maintained as a church plan, and received IRS recognition as a church plan in 1999.
- Plaintiffs Sanzone and Grasle are retired Mercy employees receiving Plan benefits; they allege the Plan is underfunded and that defendants violated ERISA fiduciary, reporting, funding, and other ERISA duties.
- Plaintiffs contend the Plan is not a church plan (so ERISA governs) and alternatively argue the church-plan exemption as applied violates the Establishment Clause; they also assert state-law claims.
- Defendants moved to dismiss for lack of subject-matter jurisdiction (Rule 12(b)(1)) and for failure to state claims (12(b)(6)); the court considered whether the Plan is an ERISA-exempt church plan and whether plaintiffs have Article III standing for the Establishment Clause claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Mercy Plan is an ERISA-exempt "church plan" under 29 U.S.C. §1002(33)(C)(i) | Plan is not maintained by a principal-purpose, church-associated organization; Mercy Health (not a committee) maintains the Plan and its principal purpose is healthcare, not plan administration. | The Plan is maintained by the Benefits Committee (a principal-purpose "organization") and Mercy Health and the Committee are associated with the Roman Catholic Church; thus the Plan qualifies as a church plan. | Court held the Plan is a church plan: the Benefits Committee "maintains" the Plan, is an "organization," and Mercy Health/the Committee are church-associated. ERISA does not govern the Plan. |
| Meaning of "maintain" in §1002(33)(C)(i) — who "maintains" the plan | "Maintain" requires authority to continue and to modify/terminate the Plan, so Mercy Health (which can terminate/modify) maintains it. | "Maintain" means day-to-day care/administration; the Benefits Committee carries out operational administration and therefore maintains the Plan. | Court adopted the operational/administrative meaning (consistent with Medina), finding the Benefits Committee maintains the Plan. |
| Whether a subcommittee/administrative body can be an "organization" for §1002(33)(C)(i) | Benefits Committee is just an internal subset of Mercy Health, not a separate "organization." | Committee is a body of persons formed for a common purpose with defined authority; ERISA contemplates such bodies as "organizations." | Court held the Benefits Committee qualifies as an "organization." |
| Whether plaintiffs have Article III standing to bring an Establishment Clause challenge to the church-plan exemption | The exemption harms participants by removing ERISA protections and risking underfunding; plaintiffs seek declaratory and equitable relief. | Plaintiffs cannot show a concrete, particularized, imminent injury tied to the exemption. | Court held plaintiffs lack standing: alleged harms are speculative/future; Count 9 dismissed for lack of subject-matter jurisdiction. |
Key Cases Cited
- Chronister v. Baptist Health, 442 F.3d 648 (8th Cir. 2006) (church plans are exempt from ERISA)
- Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652 (U.S. 2017) (plans maintained by principal-purpose organizations qualify as church plans without requiring that a church established them)
- Medina v. Catholic Health Initiatives, 877 F.3d 1213 (10th Cir. 2017) (interpreting "maintain" to mean operational care/administration and treating subcommittees as possible organizations)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (Article III standing requirements)
- Osborn v. United States, 918 F.2d 724 (8th Cir. 1990) (district court may consider factual matters in determining subject-matter jurisdiction)