On March 31, a judge determined a defined benefit pension plan maintained by Saint Peter’s University Hospital in New Brunswick, N.J., doesn’t qualify as a “church plan” under the Employee Retirement Income Security Act.
Religiously affiliated organizations with church plans can operate pensions without federal oversight, according to the report. Without a church plan exemption, organizations must meet federal requirements that they keep their pension plans funded to a certain level. “The funding requirements are often substantial and can have the effect of reducing cash balances,” the report states.
Therefore, last month’s court ruling is not only negative for Saint Peter’s, but could also have a detrimental effect on other hospitals and health systems with church plans. The court decision concerning Saint Peter’s pension plan and a similar 2013 ruling that San Francisco-based Dignity Health’s plan isn’t a church plan could “open the floodgates” for even more legal challenges against healthcare providers with church plans, according to Moody’s.
Dignity Health and Saint Peter’s are appealing the rulings on their plans. Several other healthcare organizations — Downers Grove, Ill.-based Advocate Health Care Network, St. Louis-based Ascension Health, Livonia, Mich.-based CHE Trinity Health, and Englewood, Colo.-based Catholic Health Initiatives are also dealing with similar pension plan lawsuits, according to the report.
More Articles on Hospital Finances:
RC Hospital & Clinics Breaks Ground on $24M Replacement Hospital
Mayo Clinic Wants to Cut Outpatient Costs by 30%: Here’s How They’ll Do It
S&P Slams Daughters of Charity Health System’s Credit Rating
Becker’s 3rd Annual Fall Chief Pharmacy Officer Summit is the top tier event that the people leading the future of pharmacy convene. This 3-day event is built specifically for Chief Pharmacy Officers and senior pharmacy leaders. The sessions examine the workforce, financial and clinical priorities shaping pharmacy today. Becker’s is where candid discussions flourish and new ideas thrive. Becker's 3rd Annual Fall Chief Pharmacy Officer Summit
