In Medina v. Catholic Health Initiatives, No. 16-1005 (10th Cir. 2018), the Tenth Circuit Court of Appeals (the “Court”) noted that ERISA generally exempts from its requirements “church plans”—employee-benefit plans established and maintained by churches for their employees. ERISA also extends that church-plan exemption to so-called principal-purpose organizations. A principal-purpose organization is a church-affiliated organization whose principal purpose is administering or funding a benefit plan for the employees of a church or a church-affiliated nonprofit organization.
In this case, Catholic Health Initiatives (“CHI”) is a Denver-based nonprofit organization created to carry out the Roman Catholic Church’s healing ministry. To do so, CHI operates 92 hospitals and numerous other healthcare facilities in 18 states. CHI offers a retirement plan for its employees, with more than 90,000 participants and beneficiaries, and nearly $3 billion in plan assets. The CHI plan is administered by the CHI and Affiliates Defined Benefit Plan Subcommittee (the “Subcommittee”), whose members are appointed and removed by CHI’s Board of Stewardship Trustees.
The district court held that CHI’s plan was a church plan that qualified for the ERISA exemption. On appeal, the Court agreed, concluding that CHI’s plan satisfies the statutory requirements for the church-plan exemption: CHI is a tax-exempt organization associated with a church, and the Subcommittee is a proper principal-purpose organization that is also associated with a church. The ERISA exemption, moreover, does not run afoul of the United States Constitution’s Establishment Clause.