Supreme Court: Catholic Hospital Employee Pensions Not Protected by Federal Law

In 1974, Congress passed ERISA – the Employee Retirement Income Security Act – to protect worker pensions from employer default. Under ERISA, employers need to set aside money in a trust fund to cover future pension checks, so innocent retirees don’t get hurt if their employer has an unexpected cash crunch, or even goes bankrupt.

Congress exempted “church plans” from the law, an exemption that Catholic hospitals also claimed. Unfortunately, a number of Catholic hospitals have used that exemption to skimp on necessary pension contributions for their nurses, techs and other staff. Their retirement trusts are woefully underfunded, and some hospital workers have sued, arguing that hospitals are not churches and must meet ERISA funding requirements.

In Advocate Health Care Network v. Stapleton, a decision that also covered Dignity Healthcare of California and St. Peter’s of NJ, the court unanimously agreed that Catholic and other religiously-affiliated hospitals are exempt from ERISA. Some are celebrating Advocate Health Care v. Stapleton for as an important legal victory for religious freedom. Be it so: but what lesson are lay business leaders taking from this? That it’s OK to raid your workers’ pension fund if you can get away with it?

Too many executives at for-profit corporations are already disposed to do anything the law allows to their workers or consumers, just or not, if it boosts profits. Unless Catholic employers model better behavior, they are Catholic in name only.