Last year, the U.S. Supreme Court jointly heard and ruled on a series of long-running, class action lawsuits challenging the church plan status of retirement plans sponsored by certain religiously affiliated healthcare systems. In its opinion, the Supreme Court overturned the lower courts’ decisions and held that such plans could qualify as church plans, even if they were not originally established by a church, if the plans were maintained by a church-affiliated organization whose principal purpose is the administration or funding of the plan (view our prior blog post on this Supreme Court opinion). The cases were then remanded back to their original district courts for further proceedings consistent with the Supreme Court’s order.

One of those federal district courts recently ruled, in partially denying a motion to dismiss, that the plaintiffs had pled enough facts to adequately allege a claim that the Dignity Health retirement plan was not a church plan and that the plan and the subcommittee that administered the plan were not associated with a church. Dignity Health operates a healthcare conglomerate and ancillary facilities in various states, and the plaintiffs alleged that Dignity Health’s primary purpose was to provide healthcare services. Although the court’s ruling was not a decision on the merits of the underlying claim, it does layout in detail the various claims and legal arguments made by the parties both supporting and attacking the plan’s church plan status. We are continuing to monitor these cases and expect that as these cases progress the courts may provide additional insight into the requirements for a plan to qualify as a church plan.

Rollins v. Dignity Health, No. 13-cv-01450-JST (N.D. Cal. Sept. 6, 2018).