Advocate Health Care Network v. Stapleton
581 US ___ (2017)

Annotate this Case
Justia Opinion Summary

The Employee Retirement Income Security Act (ERISA) obligates private employers offering pension plans to adhere to rules designed to ensure plan solvency and protect plan participants, 29 U.S.C. 1003(b)(2). ERISA exempts “A plan established and maintained for its employees . . . by a church . . . [which] includes a plan maintained by an organization . . . the principal purpose . . . of which is the administration or funding of [such] plan . . . for the employees of a church . . . , if such organization is controlled by or associated with a church,” section 1002(33)(C)(i). Defendants, church-affiliated nonprofits that run hospitals, offer their employees defined-benefit pension plans, which were established by the hospitals themselves, and are managed by internal employee-benefits committees. Current and former employees filed class actions alleging that the hospitals’ plans did not fall within ERISA’s "church plan" exemption because they were not established by a church. The lower courts agreed with the employees. The Supreme Court reversed. A plan maintained by a principal-purpose organization qualifies as a “church plan,” regardless of who established it. In amending ERISA, Congress deemed the category of plans “established and maintained by a church” to “include” plans “maintained by” principal-purpose organizations.

Prior History

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

ADVOCATE HEALTH CARE NETWORK et al. v. STAPLETON et al.

certiorari to the united states court of appeals for the seventh circuit

No. 16–74. Argued March 27, 2017—Decided June 5, 2017[1]

The Employee Retirement Income Security Act of 1974 (ERISA) generally obligates private employers offering pension plans to adhere to an array of rules designed to ensure plan solvency and protect plan participants. “[C]hurch plan[s],” however, are exempt from those regulations. 29 U. S. C. §1003(b)(2). From the beginning, ERISA has defined a “church plan” as “a plan established and maintained . . . for its employees . . . by a church.” §1002(33)(A). Congress then amended the statute to expand that definition, adding the provision whose effect is at issue here: “A plan established and maintained for its employees . . . by a church . . . includes a plan maintained by an organization . . . the principal purpose . . . of which is the administration or funding of [such] plan . . . for the employees of a church . . . , if such organization is controlled by or associated with a church.” §1002(33)(C)(i). (This opinion refers to the organizations described in that provision as “principal-purpose organizations.”)

Petitioners, who identify themselves as three church-affiliated nonprofits that run hospitals and other healthcare facilities (collectively, hospitals), offer their employees defined-benefit pension plans. Those plans were established by the hospitals themselves, and are managed by internal employee-benefits committees. Respondents, current and former hospital employees, filed class actions alleging that the hospitals’ pension plans do not fall within ERISA’s church-plan exemption because they were not established by a church. The District Courts, agreeing with the employees, held that a plan must be established by a church to qualify as a church plan. The Courts of Appeals affirmed.

Held: A plan maintained by a principal-purpose organization qualifies as a “church plan,” regardless of who established it. Pp. 5–15.

(a) The term “church plan” initially “mean[t]” only “a plan established and maintained . . . by a church.” But subparagraph (C)(i) provides that the original definitional phrase will now “include” another—“a plan maintained by [a principal-purpose] organization.” That use of the word “include” is not literal, but tells readers that a different type of plan should receive the same treatment (i.e., an exemption) as the type described in the old definition. In other words, because Congress deemed the category of plans “established and maintained by a church” to “include” plans “maintained by” principal-purpose organizations, those plans—and all those plans—are exempt from ERISA’s requirements.

Had Congress wanted, as the employees contend, to alter only the maintenance requirement, it could have provided in subparagraph (C)(i) that “a plan maintained by a church includes a plan maintained by” a principal-purpose organization—removing “established and” from the first part of the sentence. But Congress did not adopt that ready alternative. Instead, it added language whose most natural reading is to enable a plan “maintained” by a principal-purpose organization to substitute for a plan both “established” and “maintained” by a church. And as a corollary to that point, the employees’ construction runs aground on the so-called surplusage canon—the presumption that each word Congress uses is there for a reason. The employees read subparagraph (C)(i) as if it were missing the two words “established and.” This Court, however, “give[s] effect, if possible, to every clause and word of a statute.” Williams v. Taylor, 529 U. S. 362 . Pp. 5–12.

(b) Both parties’ accounts of Congress’s purpose in enacting subparagraph (C)(i) tend to confirm this Court’s reading that plans maintained by principal-purpose organizations are eligible for the church-plan exemption, whatever their origins. According to the hospitals, Congress wanted to ensure that churches and church-affiliated organizations received comparable treatment under ERISA. If that is so, this Court’s construction of the text fits Congress’s objective to a T, as a church-establishment requirement would necessarily disfavor plans created by church affiliates. The employees, by contrast, claim that subparagraph (C)(i)’s main goal was to bring within the church-plan exemption plans managed by local pension boards—organizations often used by congregational denominations—so as to ensure parity between congregational and hierarchical churches. But that account cuts against, not in favor of, their position. Keeping the church-establishment requirement would have prevented some plans run by pension boards—the very entities the employees say Congress most wanted to benefit—from qualifying as “church plans” under ERISA. Pp. 12–14.

No. 16–74, 817 F. 3d 517; No. 16–86, 810 F. 3d 175; and No. 16–258, 830 F. 3d 900, reversed.

Kagan, J., delivered the opinion of the Court, in which all other Members joined, except Gorsuch, J., who took no part in the consideration or decision of the cases. Sotomayor, J., filed a concurring opinion.

Notes

1  Together with No. 16–86, Saint Peter’s Healthcare System et al. v. Kaplan, on certiorari to the United States Court of Appeals for the Third Circuit, and No. 16–258, Dignity Health et al. v. Rollins, on certiorari to the United States Court of Appeals for the Ninth Circuit.

Primary Holding

No matter who established the plan, a plan maintained by a principal-purpose organization is a "church plan" for the purposes of ERISA.

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