Kaplan v. Saint Peter's Healthcare System, No. 15-1172 (3d Cir. 2017)

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Justia Opinion Summary

St. Peter’s, a non-profit healthcare entity, runs a hospital. It is not a church, but has ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most members of its Board of Governors and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures and statues throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s filed an IRS application, seeking a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33). In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by more than $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan for tax purposes. The Third Circuit initially affirmed denial of a motion to dismiss, concluding that St. Peter’s could not establish an exempt church plan because it is not a church. Following consideration by the U.S. Supreme Court in 2017, the Third Circuit vacated and reversed.

This opinion or order relates to an opinion or order originally issued on December 29, 2015.

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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________ No. 15-1172 _____________ LAURENCE KAPLAN, on behalf of himself, individually, and on behalf of all others similarly situated v. SAINT PETER’S HEALTHCARE SYSTEM; RONALD C. RAK; SUSAN BALLESTERO, an individual; GARRICK STOLDT, an individual; JOHN and JANE DOES 1–20 Saint Peter’s Healthcare System, Ronald C. Rak, Susan Ballestero, Garrick Stoldt, Appellants ________________ Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 3-13-cv-02941) District Judge: Honorable Michael A. Shipp ________________ On Remand from the Supreme Court of the United States on July 7, 2017 Submitted on Remand July 7, 2017 Present: McKEE, AMBRO, and HARDIMAN, Circuit Judges _____________________________ ORDER __________________________________ By opinion and judgment dated June 5, 2017, the Supreme Court of the United States ordered the judgment of this Court entered December 29, 2015 be reversed. Advocate Health Care Network, et al. v. Stapleton, et al., __ U.S. __, 137 S.Ct. 1652 (2017). In accordance with the decision of the Supreme Court, the opinion and judgment of this Court are hereby vacated. It is further ADJUDGED AND ORDERED that the judgment of the District Court dated March 31, 2014 is hereby reversed. Costs are taxed in favor of the Appellants. By the Court, s/ Thomas L. Ambro, Circuit Judge ATTEST: s/Marcia M. Waldron, Clerk Dated: July 13, 2017

Primary Holding

On remand from the Supreme Court, Third Circuit reverses its previous denial of a motion to dismiss a case involving the application of "church plan" exemption from ERISA for a hospital.

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