349 F. Supp. 3d 733
S.D. Ill.2018Background
- OSF Healthcare System (a Catholic-affiliated 501(c)(3)), its member corporation STOSF (Sisters of the Third Order of St. Francis), and merged Saint Anthony's Health Center are parties; OSF sponsors two defined-benefit plans: the St. Francis Plan (~18,000 participants) and the St. Anthony's Plan (~1,300 participants).
- Plan administration is vested in two committees (St. Francis Committee and St. Anthony's Committee); committees are dominated by Sisters and have broad discretionary authority over benefit eligibility, claims, interpretation, and certain plan operations.
- Plaintiffs are vested participants who allege defendants improperly treated the Plans as ERISA "church plans," resulting in noncompliance with ERISA funding, notice, disclosure, and fiduciary duties; they also challenged the church-plan exemption as violating the Establishment Clause.
- Defendants moved for summary judgment arguing the Plans qualify as church plans under 29 U.S.C. §1002(33) (as interpreted in Advocate Health Care Network v. Stapleton) and that the exemption is constitutional.
- The court applied the three-step post-Advocate framework (entity associated with a church; plan maintained by a principal-purpose organization; principal-purpose organization associated with a church) and found the facts support church-plan status.
- The court also held that application of the church-plan exemption survives Lemon scrutiny and does not violate the Establishment Clause; summary judgment for defendants, case dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OSF is a nonprofit "associated with" a church for §1002(33) | OSF is not sufficiently controlled/connected to the Church to be "associated with" | OSF is Catholic-affiliated: sole-member STOSF (Sisters), Catholic governance requirements, Official Catholic Directory listing | OSF is associated with a church; statutory test satisfied |
| Whether the Plan Committees are "principal-purpose organizations" that "maintain" the Plans | "Maintain" requires more (e.g., funding authority, power to amend/terminate); committees lack those powers | Committees exercise core administrative control (claims, eligibility, interpretation) — ordinary meaning of "maintain" satisfied | Committees qualify as organizations that maintain the Plans under ordinary meaning; church-plan element met |
| Whether the Plan Committees are themselves "associated with" a church | Committees are too attenuated or inactive to share church convictions | Committees are dominated by Sisters and share OSF's Catholic affiliation | Committees are associated with a church; exemption applies |
| Whether applying the church-plan exemption violates the Establishment Clause | Exemption advances religion or excessively entangles government with religion | Exemption serves secular purpose (avoid governmental interference with religious missions), does not have primary effect of advancing religion, and avoids entanglement | Exemption passes Lemon: constitutional as applied |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard; genuine dispute)
- Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652 (statutory interpretation of ERISA church-plan exemption)
- Medina v. Catholic Health Initiatives, 877 F.3d 1213 (10th Cir.) (post-Advocate three-step framework; principal-purpose/subcommittee analysis)
- Lemon v. Kurtzman, 403 U.S. 602 (Establishment Clause test)
- Corp. of the Presiding Bishop v. Amos, 483 U.S. 327 (permissible statutory exemptions for religious organizations)
- Overall v. Ascension, 23 F. Supp. 3d 816 (use of Official Catholic Directory as evidence of association)