Another Appeals Court Rules on Church Plan Case

The 7th U.S. Circuit Court of Appeals has ruled that the defined benefit (DB) plan sponsored by Advocate Health Care Network does not qualify as a church plan exempt from many provisions of the Employee Retirement Income Security Act (ERISA).

The appellate court noted that Advocate is not a church, nor was its predecessor. According to the opinion, Advocate formed in 1995 as a 501(c)(3) non-profit  corporation from a merger between two  health systems—Lutheran General HealthSystem and Evangelical Health Systems. Today, Advocate is affiliated with both the Metropolitan Chicago Synod of the Evangelical Lutheran Church in America and the Illinois Conference of the United Church of Christ, but it is not owned or financially supported by either.

Using much the same logic as the 3rd U.S. Circuit Court of Appeals in Kaplan v. St. Peter’s Healthcare System, the 7th Circuit decided a church plan established by a church and maintained by a church is a church plan, and a church plan established by a church and maintained by a church-affiliated organization is a church plan—but a church plan established by a church-affiliated organization and maintained by a church-affiliated organization is not a church plan. The appellate court in Advocate agreed with the 3rd Circuit that, according to the language of ERISA, for church plan exemption, there are two requirements—establishment and maintenance—and only the maintenance requirement is expanded by the use of the word “includes.”

The 7th Circuit affirmed a district court’s opinion. The appellate court’s decision in Stapleton v. Advocate Health Care Network and Subsidiaries is here.