Sanzone v. Health
Opinion of the Court
*799Plaintiffs Sally Sanzone and Gene Grasle worked at different health care facilities operated by defendant Mercy Health. When they retired from Mercy in 2003 and 2013, respectively, they began receiving pension benefits from the Mercy Health MyRetirement Personal Pension Account Plan (the "Plan" or the "Mercy Plan"), and continue to do so. Plaintiffs bring this action against Mercy Health, the Mercy Health Benefits Committee, and the Mercy Health Stewardship Committee.
Plaintiffs allege that defendants have underfunded the Plan and have violated various provisions of the Employment Retirement Income Security Act (ERISA), including their duties under ERISA as fiduciaries or sponsors of the Plan. They contend that the Mercy Plan does not qualify for ERISA's "church plan" exemption because is it not maintained by an organization whose principal purpose is providing benefits for employees of a church. Plaintiffs also seek a declaration that ERISA's "church plan" exemption as applied to the Plan violates the Establishment Clause of the First Amendment. In alternative claims, plaintiffs seek relief under state law.
I agree with defendants that the Mercy Plan is an ERISA-exempt church plan and, further, that plaintiffs lack standing to bring their Establishment Clause claim. Therefore, I do not have subject-matter jurisdiction over any of plaintiffs' ERISA and constitutional claims. Without federal jurisdiction over those claims, I have no jurisdictional authority to consider plaintiffs' state law claims, so I will dismiss this case in its entirety without prejudice for lack of jurisdiction.
Background
Mercy Health is a 501(c)(3) nonprofit corporation operating one of the largest Catholic healthcare systems in the United States, with twenty-nine acute care hospitals, eleven specialty hospitals, and several hundred physician practices and outpatient facilities. Mercy Health offers a retirement plan for its employees, with more than 40,000 participants who are current or former employees of Mercy Health. The Mercy Health Benefits Committee is the Plan Administrator. The Mercy Health Stewardship Committee oversees and monitors the Plan's financial status. Mercy Health is the Plan's Sponsor.
The Plan was originally established in 1960 as "the Retirement Plan for Employees of the Religious Sisters of Mercy of the Union in the United States of America, Province of St. Louis." In 1991, it was renamed the Retirement Plan for Employees of the Sisters of Mercy of the Americas, St. Louis. Sponsorship of the Plan was transferred to the Sisters of Mercy Health System (now Mercy Health) in March 2007. In 2011, the name of the Plan was changed to its current name, the Mercy Health MyRetirement Personal Pension Account Plan.
Plaintiffs Sanzone and Grasle are former employees of Mercy Health. Sanzone retired from Mercy Health in 2003 and began receiving pension benefits under the Plan. Grasle retired in 2013 and likewise began receiving pension benefits under the Plan. Both continue to receive benefits, and neither claim that their benefits have been reduced. In this putative class action,
The Second Amended Complaint
Plaintiffs bring their complaint in thirteen counts.
In Counts 1 through 8, plaintiffs seek a declaratory judgment that the Mercy Plan is not a church plan and, further, that it must comply with ERISA's requirements and take steps to be brought into compliance with ERISA. They also seek monetary penalties for the Plan Administrator's failure to meet certain statutory obligations under ERISA. They bring their ERISA claims as follows:
• Count 1 - for equitable relief under29 U.S.C. §§ 1332 (a)(2), 1332(a)(3), and 1109(a) ;
• Count 2 - for violating reporting and disclosure provisions under29 U.S.C. §§ 1022 , 1023, 1024(b)(3), 1021(d)(1), 1021(f), and 1025(a)(1) ;
• Count 3 - for failing to provide minimum funding under29 U.S.C. § 1082 ;
• Count 4 - for failing to establish the Plan pursuant to a written instrument meeting ERISA requirements under29 U.S.C. § 1102 ;
• Count 5 - for failing to establish a trust that meets ERISA requirements under29 U.S.C. § 1103 ;
• Count 6 - to clarify participants' rights to future benefits under29 U.S.C. § 1132 (a)(1)(B) ;
• Count 7 - for civil penalties under ERISA for violations of29 U.S.C. §§ 1021 (d)(1), 1021(f), and 1025(a)(1) ; and
• Count 8 - for breach of fiduciary duties under29 U.S.C. § 1132 (a)(2).
Count 9 of the complaint is a contingent claim, alleging that if the Plan is an ERISA-exempt church plan, then the exemption as applied to the Plan violates the Establishment Clause of the First Amendment of the Constitution.
In Counts 10 through 13, plaintiffs seek alternative relief under state law for breach of contract, promissory estoppel, unjust enrichment, and breach of fiduciary duty.
Defendants seek dismissal of all of plaintiffs' ERISA and Establishment Clause claims under Fed. R. Civ. P. 12(b)(1) for this Court's lack of subject-matter jurisdiction over the claims. Defendants also seek dismissal of five of plaintiffs' eight ERISA
*801claims under Rule 12(b)(6) for failure to state a claim. In addition, defendants seek a general merits determination that the Plan qualifies as an ERISA-exempt church plan, thereby subjecting all of plaintiffs' ERISA claims to dismissal. Finally, defendants contend that with the dismissal of plaintiffs' federal claims, I should decline to exercise supplemental jurisdiction over plaintiffs' state law claims.
For the following reasons, I do not have subject-matter jurisdiction over plaintiffs' ERISA and Establishment Clause claims and will grant defendants' motion to dismiss these claims. With no original jurisdiction over these claims, I have no authority to exercise supplemental jurisdiction over plaintiffs' remaining state law claims; and no independent jurisdictional basis exists for me to consider these claims. They will likewise be dismissed.
Discussion
Defendants invoke both Rule 12(b)(1) and 12(b)(6) to dismiss plaintiffs' federal claims. I consider the Rule 12(b)(1) challenge first because all other defenses are moot if I lack subject-matter jurisdiction.
Defendants base their jurisdictional argument on their claim that plaintiffs lack standing to raise any of their federal claims. I agree that plaintiffs lack standing to bring their Establishment Clause claim and arguably lack standing to bring some of their ERISA claims. However, in conducting a factual review of this Court's jurisdiction, I find that federal question jurisdiction does not exist over any of plaintiffs' ERISA claims because ERISA does not govern the Plan at issue. Although defendants do not raise lack-of-federal-question as a specific basis to dismiss these claims, I may consider jurisdictional issues not raised by the parties. Mansfield, C. & L.M. Ry. Co. v. Swan ,
A. ERISA Claims
ERISA generally requires private employers offering pension plans to adhere to a statutory framework designed to ensure plan solvency and to protect plan participants. But "[c]hurch plans are not ERISA plans" and are exempt from complying with ERISA's requirements. Chronister v. Baptist Health ,
For the following reasons, I conclude that the Mercy Plan here is a church plan and is not subject to ERISA. The ERISA claims raised in Counts 1 through 8 of the second amended complaint fail to present a federal question that would bring the claims within this Court's subject-matter *802jurisdiction. They must therefore be dismissed.
Since its enactment in 1974, ERISA has exempted "church plans" from compliance with ERISA's requirements.
maintained by an organization, whether a civil law corporation or otherwise, the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches.
In recent years, several church-plan participants have challenged the continued application of the church-plan exemption to their respective plans, arguing that while the statute now exempts plans maintained by a principal-purpose organization rather than by a church, the statute nevertheless continues to require that such plans be "established" by a church in order to qualify for the exemption. In Advocate Health Care Network v. Stapleton , --- U.S. ----,
Plaintiffs concede that, under Stapleton , church plans are not restricted to only those established by churches. They raise several arguments, however, that the entity maintaining the Mercy Plan at issue here does not meet the definition of a principal-purpose organization under ERISA and thus that the Plan falls outside the church-plan exemption.
1. Who Maintains the Plan?
Plaintiffs first argue that Mercy Health is the organization that "maintains" the Plan, and because Mercy Health's principal purpose is the provision of health care and not to administer or fund the Plan, it cannot be considered a principal-purpose organization under § 1002(33)(C)(i). Plaintiffs aver that to "maintain" a plan means to commit to and assume ultimate responsibility for providing benefits, and to continue the plan, which necessarily includes the authority to modify or terminate the plan. Plaintiffs contend that because Mercy Health is the entity with these responsibilities, it is the entity that "maintains" the Plan under § 1002(33)(C)(i).
*803Several provisions of ERISA include the term "maintain," but no provision defines the term. When a term goes undefined in a statute, courts must give the term its ordinary meaning. Taniguchi v. Kan Pac. Saipan, Ltd. ,
Black's Law Dictionary provides several meanings for the word "maintain," the most relevant being: "1. To continue (something)"; and "4. To care for (property) for purposes of operational productivity or appearance; to engage in general repair and upkeep[.]" Maintain, Black's Law Dictionary (10th ed. 2014). Webster's defines "maintain" as "to keep in an existing state (as of repair, efficiency, or validity)"; "to continue or persevere in"; "sustain"; and "to support or provide for." Maintain, Merriam-Webster's II Collegiate Dictionary (10th ed. 2002). In the business context, the Cambridge Dictionary defines "maintain" as "to make something continue in the same way or at the same level." Cambridge Dictionary , https://dictionary.cambridge.org/us/dictionary/english/maintain (last visited May 31, 2018).
Plaintiffs argue that in order to have the authority to "continue" something, as several dictionary definitions allude to, the entity must likewise have the authority to terminate that something. Plaintiffs contend that because Mercy Health is the only entity with authority to terminate the Plan under the Plan's terms, then it necessarily is the organization that "maintains" the Plan under § 1002(33)(C)(i). Not surprisingly, defendants seize upon the alternative meaning of "maintain" and argue that because the Benefits Committee as Plan Administrator is charged under the Plan with the duties to care for the operational productivity of the Plan, preserve it from failure or decline, and continue the Plan at such a level to ensure its operation, the Benefits Committee is necessarily the entity that "maintains" the Plan under § 1002(33)(C)(i). To the extent these positions are based on dictionary definitions, both are plausible. However, when I consider the dictionary definitions in conjunction with other courts' treatment of the term "maintain" in the context of ERISA-exempted plans, I conclude that for purposes of § 1002(33)(C)(i), the Benefits Committee is the entity that maintains the Plan.
In Medina v. Catholic Health Initiatives ,
In Crosby v. California Physicians' Serv. ,
There is no evidence that the County engages in any claims administration or communicates with members about plan coverage. The plan administrator is CAPE....Defendants make benefits determinations and communicate those decisions to members. CAPE is 'solely responsible for the distribution of the [summary benefits and coverage] for each benefit plan offered.' Thus there is no evidence that Plaintiffs' plan is maintained by the County.
Crosby ,
Here, the evidence and information before the Court shows that, under the totality of the circumstances, the Benefits Committee "maintains" the Mercy Plan. First, plaintiffs' complaint identifies the Benefits Committee as having the "sole responsibility for administration of the Plan" and "all discretionary powers and authority necessary to carry out the provisions of the Plan." (Sec. Amd. Compl., ECF # 145 at paras. 118, 136.) The complaint further delineates some of the Committee's specific duties and responsibilities, including:
plan administration; interpreting the Plan to determine all questions arising in the administration, interpretation and application of the Plan; adopting rules for the Plan; employing accountants, actuaries, counsel, specialists and other persons necessary to help carry out the Committee's duties and responsibilities under the Plan; issuing directions to the Trustee concerning all benefits which are to be paid from the Trust Fund pursuant to the provisions of the Plan; directing the Trustee's exercise of its power in the administration and investment of the Trust Fund; making all decisions and determinations concerning the right of any person to a benefit under the Plan; requiring each Participant Employer to keep such books, records, and other data as it deems necessary for the proper administration of the Plan; exercising discretion to determine that the Participating Employers pay or reimburse costs and expenses of the Plan; and monitoring other fiduciaries.
(Id. at para. 137.) In addition to these duties identified by the plaintiffs, the Plan also directs the Benefits Committee to, inter alia , engage in claims administration and communicate with members about plan coverage; approve and/or provide claims forms and election forms for participants; comply with all reporting and disclosure requirements; provide consent regarding who shall become participating employers; determine the effective date of the Plan with respect to employees, the *805classification of employees, and specify rules regarding years of service; and inspect and audit the Trustee's records. Notably, the Plan provides that the Benefits Committee's decisions are final, conclusive, and binding - including on the Plan Sponsor, that is, Mercy Health.
While plaintiffs are correct that Mercy Health is the sole entity that can modify or terminate the Plan, the totality of the circumstances shows that the Benefits Committee is the entity that actually "maintains" the Plan as that term is ordinarily used in the context most relevant here.
2. Is the Benefits Committee an Organization?
Plaintiffs argue that if the Benefits Committee is considered to be the entity that maintains the Plan, it nevertheless cannot be considered an "organization" under § 1002(33)(C)(i) because it merely is an internal subset of Mercy Health and does not have a distinct, separate existence.
As with the term "maintain," several provisions of ERISA include the term "organization," but none define it specifically. Notably, however, while ERISA does not define "organization" as a stand-alone word, it does define "employee organization" to mean "... any organization of any kind, or any agency or employee representation committee, association, group, or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning an employee benefit plan[.]"
Webster's defines "organization" as "an administrative and functional structure." Organization, Merriam-Webster's II Collegiate Dictionary (10th ed. 2002). In the Cambridge Dictionary , "organization" is defined as "a group of people who work together in an organized way for a shared purpose." Cambridge Dictionary , https://dictionary.cambridge.org/us/dictionary/english/organization (last visited May 31, 2018). Similarly, Black's Law Dictionary defines "organization" as "a body of persons (such as a union or corporation) formed for a common purpose." Organization, Black's Law Dictionary (10th ed. 2014). And the Tenth Circuit in Medina explicitly found that a subcommittee of a larger non-profit organization can itself be an "organization" under § 1002(33)(C)(i). Medina ,
The Benefits Committee is a body made up of five members, with one member designated as the chairperson of the committee. Its common purpose is to administer the Plan in accordance with its terms and with such powers and authority as is necessary to carry out the Plan's provisions.
Because the Benefits Committee is a body of persons formed for a common and particular purpose and has specific and exclusive responsibilities to further this purpose, it meets the dictionary definition *806of "organization" as that term is ordinarily used. When considered with ERISA's reference to such a group as a form of "organization" under the statute, I conclude that for purposes of § 1002(33)(C)(i), the Benefits Committee is an "organization."
3. Are Mercy Health and the Benefits Committee Controlled by or Associated with a Church?
To qualify as a church plan under § 1002(33)(C)(i), a plan must be for "the employees of a church or a convention or association of churches," and the principal-purpose organization itself must be "controlled by or associated with" a church or a convention or association of churches. Plaintiffs argue that neither Mercy Health (as the employer) nor the Benefits Committee (as the principal-purpose organization) is "controlled by or associated with" a church. For the following reasons, I disagree.
a. Mercy Health
"The term employee of a church or a convention or association of churches includes [ ] an employee of an organization..., which is exempt from tax under [
Mercy Health Ministry is an organization within the Roman Catholic Church, created by the Church's canon law as a "public juridic personality" to pursue its purpose "to embody the mission of healing ministry of Jesus in the Roman Catholic Church, consistent with the teaching and laws of the Church[.]"
Mercy Health, the corporate arm of the Ministry, is listed in the Official Catholic Directory.
*807Catholic Charities of Maine v. City of Portland ,
Additionally, there is substantial evidence that Mercy Health is governed by and operates in furtherance of the principles of the Roman Catholic Church. Mercy Health's Articles of Incorporation state that it operates exclusively for religious, charitable, scientific, and educational purposes and, further, operates
(i) to serve the mission of the Roman Catholic Church and Mercy Health Ministry ... to succeed and carry on the health care ministries conducted by the ... "Sisters of Mercy"[ ], a religious order of the Roman Catholic Church, in its charitable apostolate and health services; (ii) to evidence the policies of the Sisters of Mercy and Mercy Health Ministry and governing its charitable apostolate and health services; (iii) to witness to Christ's concern for the care of the sick and injured and the teachings of the Roman Catholic Church regarding Christian health services and charity[.]15
The Articles further state that Mercy Health adheres to and is guided by the Ethical and Religious Directives for Catholic Health Services of the National Conference of Catholic Bishops as approved by the United States Conference of Catholic Bishops, as applied by the Diocesan Bishops.
Such extensive indicia of Mercy Health's shared common religious bonds and convictions with the Roman Catholic Church and the interwoven nature of its relationship with the Church conclusively demonstrates that it is "associated with a church" as required under § 1002(33)(C) in order for its employees to be covered under a church plan.
b. Benefits Committee
Plaintiffs aver that the Benefits Committee is an internal subset of Mercy Health. Given that Mercy Health is associated with a church, application of simple logic as the Supreme Court did in Stapleton shows that the Benefits Committee must therefore necessarily be associated with a church:
Premise 1: Mercy Health is associated with a church.
Premise 2: Mercy Health includes the Benefits Committee.
Deduction: The Benefits Committee is associated with a church.
See Stapleton ,
*8084. Is the Plan Disqualified as a Church Plan?
To qualify for the church-plan exemption, "substantially all of the individuals included" in a church plan must be deemed employees of a church.
In their second amended complaint, plaintiffs specifically aver that Mercy Health has more than 40,000 current and former employees
Against these specific averments made in their complaint, plaintiffs' general assertion that the Mercy Plan covers more than an insubstantial number of employees who do not work for a church or a tax-exempt entity, with nothing more, is insufficient for me to conclude that the Mercy Plan fails to qualify as a church plan.
5. The Mercy Plan is a Church Plan Exempt from ERISA.
For all of the foregoing reasons, the Mercy Plan at issue in this case is maintained by a church-associated principal-purpose organization for the provision of benefits for the employees of a church or a convention or association of churches, and whose membership does not disqualify it as a church plan under
The claims raised in Counts 1 through 8 of plaintiffs' second amended complaint will therefore be dismissed for lack of subject-matter jurisdiction.
B. Establishment Clause
Article III, § 2 of the United States Constitution limits federal jurisdiction to actual cases and controversies. The "threshold requirement" imposed by Article III is that those who seek to invoke the power of federal courts must allege an actual case or controversy. O'Shea v. Littleton ,
*809Jenkins v. McKeithen ,
For Article III standing, plaintiffs must show: (1) that they suffered an "injury in fact," (2) that a causal relationship exists between the injury and the challenged conduct, and (3) that the injury likely will be redressed by a favorable decision. Lujan ,
Here, plaintiffs make no specific allegations to suggest that they would have a better funded pension if the church-plan exemption did not apply to the Mercy Plan. Plaintiffs do not allege a concrete harm or that the relief they seek would redress an alleged injury. While plaintiffs raise the specter of a potentially underfunded Plan in the future without ERISA protections, they make no claim of any specific or concrete injury suffered by them as a consequence of being a participant in a church plan. "Allegations of possible future injury do not satisfy the requirements of Art. III. A threatened injury must be certainly impending to constitute injury in fact." Whitmore v. Arkansas ,
Accordingly, plaintiffs' asserted Establishment Clause claim fails to meet the constitutional requirement that a plaintiff demonstrate harm that is "actual or imminent, *810not conjectural or hypothetical." Lujan ,
State Law Claims
[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to the claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.
Because I do not have original subject-matter jurisdiction over plaintiffs' ERISA and Establishment Clause claims, I have no authority to exercise supplemental jurisdiction over the remaining state law claims. Nor is there any independent jurisdictional basis for me to consider the claims. I will therefore dismiss the claims raised in Counts 10 through 13 of plaintiffs' second amended complaint for lack of jurisdiction.
Accordingly, for all of the foregoing reasons,
IT IS HEREBY ORDERED that defendants' Motion to Dismiss Plaintiffs' Consolidated Second Amended Class Action Complaint [150] is GRANTED .
IT IS FURTHER ORDERED that this case is dismissed without prejudice for lack of subject-matter jurisdiction.
An appropriate Judgment is entered herewith.
Defts.' Exh. 8, ECF # 150-8, Plan.
In their second amended complaint, plaintiffs bring their claims individually and "on behalf of all others similarly situated." However, class certification has not yet been sought or granted on the second amended complaint.
"ERISA provides (1) that a 'church plan' means a 'plan established and maintained ... by a church' and (2) that a 'plan established and maintained ... by a church' is to 'include[ ] a plan maintained by' a principal-purpose organization." Stapleton ,
Although the plan participants in Stapleton raised some of these arguments at the district court level - and specifically, that the hospital entities were not associated with a church and that an internal benefits committee cannot be considered a principal-purpose organization - they did not raise them before the Supreme Court. See Stapleton ,
Defts.' Exh. 8, ECF # 150-8, Plan at § 9.6.
The parties do not dispute that Mercy Health is a tax exempt organization under
Defts.' Exh. 1, ECF # 150-1, Vatican Decree.
Defts.' Exh. 2, ECF # 150-2, Canonical Statutes.
Defts.' Exh. 3, ECF # 150-3, Ministry Bylaws.
Defts.' Exh. 2, ECF # 150-2, Canonical Statutes.
Defts.' Exh. 6, ECF # 150-6, Directory.
Defts.' Exh. 4, ECF # 150-4, Art. of Incorp.
Defts.' Exh. 2, ECF # 150-2, Canonical Statutes.
ECF # 145 at paras. 1, 19, 40.
Plaintiffs, of course, are free to pursue these claims in an appropriate state court if they so choose.
Reference
- Full Case Name
- Sally SANZONE v. Mercy HEALTH
- Cited By
- 4 cases
- Status
- Published