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Boden v. St. Elizabeth Medical Center, Inc.

United States District Court, E.D. Kentucky, Northern Division, Covington

July 25, 2019



          David L. Banning United States District Judge.

         This matter is before the Court on cross-Motions for Summary Judgment (Docs. # 129 and 130) pursuant to the Court's October 9, 2018 Order (Doc. # 123). The Motions address the question of whether St. Elizabeth Medical Center's at-issue defined-benefit plan is a “church plan” and therefore exempt from the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). (Docs. # 129 and 130). The Court having heard oral argument and reviewed the Motions, accompanying briefing, and available record evidence, has determined that the at-issue plan is a “church plan” and is exempt from ERISA. Accordingly, for the following reasons, Defendants' Motion for Partial Summary Judgment (Doc. # 129) is granted and Plaintiffs' Motion for Summary Judgment (Doc. # 130) is denied. Further, as the Court has determined that ERISA does not apply and must dismiss the ERISA claims-the only claims over which the Court has original jurisdiction-it also will dismiss the pending state-law claims pursuant to 28 U.S.C. § 1367(c)(3).


         Dolores Jane Boden, Jeanine Godsey, and Patricia Schafer (“Plaintiffs”) previously worked as nurses at St. Elizabeth Medical Center (“St. Elizabeth”), a nonprofit corporation with its headquarters in Edgewood, Kentucky. (Doc. # 74 at 4-5). St. Elizabeth provides health care in Kentucky, Ohio, and Indiana. Id. at 5. St. Elizabeth funds a defined-benefit pension plan, which “promises [its] participants a retirement income that is based on their income and length of service.” Id. at 1-2. Each of the Plaintiffs is a participant in the St. Elizabeth Medical Center Employees' Pension Plan (the “Plan”). Id. at 4-5.

         The Plan, first established in 1966 and funded by St. Elizabeth, provides monthly pension benefits to retired St. Elizabeth employees. Id. at 10. The assets which make up the Plan are held in a trust, and benefits are paid from the trust to the Plan participants. Id. On February 23, 2016, the President and CEO of St. Elizabeth, Garren Colvin, and the Senior Vice President and Chief Clinical Integration Officer, Dr. Robert Prichard, informed Plan participants in a letter that “[a]s of December 31, 2015, the [St. Elizabeth Plan] was 59% funded.” Id. at 2; see also (Doc. # 74-1) (letter from Garren Colvin and Robert Prichard to Plan participants).[1]

         In light of this information, the Plaintiffs filed this putative class action suit alleging, inter alia, violations of ERISA by St. Elizabeth, St. Elizabeth Medical Center Employees' Pension Plan Administrative Committee, and several named and unnamed individuals involved in the administration of the Plan (“initial Defendants”). The initial Defendants argued that St. Elizabeth was not required to follow the provisions of ERISA because it was considered a church, and therefore fell under ERISA's church-plan exemption. (Doc. # 21). The Court initially stayed this case pending the Supreme Court's resolution of Advocate Health Care Network v. Stapleton, 137 S.Ct. 1652 (2017), a case dealing with the exemption for churches provided by ERISA. (Doc. # 60).

         Following the Supreme Court's decision in Stapleton, the Court allowed Plaintiffs to file an Amended Complaint. (Doc. # 71). The Amended Complaint brings claims, including a request for declaratory judgment, against St. Elizabeth as well as current and former members of the St. Elizabeth Medical Center Employees' Pension Plan Administrative Committee (“the Committee”)-collectively, the “Defendants”-for violations of ERISA and Kentucky state law. (Doc. # 74). The Committee, created by the St. Elizabeth Board of Trustees (“the Board”), is the Plan's fiduciary. Id. at 5. Defendants answered the Amended Complaint and brought a declaratory-judgment counterclaim, seeking a declaration that the Plan is a church plan under ERISA. (Doc. # 76).

         The Defendants then filed a Motion to Dismiss the former members of the Committee from the case (Doc. # 77) and the Plaintiffs filed a Motion to Dismiss the Defendants' declaratory-judgment counterclaim (Doc. # 81). The Court granted in part and denied in part the Defendants' Motion to Dismiss and granted the Plaintiffs' Motion to Dismiss on April 4, 2018. (Doc. # 100). The Defendants then filed a Motion for Reconsideration of the April 4, 2018 Order, which the Court also denied. (Docs. # 102 and 120). Thereafter, the Court convened a telephonic conference on October 9, 2018 to discuss the need for further discovery and a pending summary-judgment Motion. (Doc. # 123). During that conference, the Court ordered that the Defendants' renewed Motion for Summary Judgment (Doc. # 115) be denied without prejudice, that the Plaintiffs' request for discovery be granted in part, and that cross-motions for summary judgment on the church-plan issue be filed by January 9, 2019. (Doc. # 123).

         Motions for Summary Judgment (Docs. # 129 and 130) were timely filed pursuant to the Court's Order. (Doc. # 123). Following two extensions of time for briefing (Docs. # 135 and 141) and an Order allowing the filing of a sur-reply and sur-sur-reply (Doc. # 146), briefing of both Motions was completed. (Docs. # 137, 139, 142, 143, 147 and 148). Those Motions became ripe for the Court's review after oral argument on July 19, 2019 before the undersigned.

         II. ANALYSIS

         A. Standard of Review

         Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In adjudicating a summary-judgment motion, the judge must not weigh the evidence before the Court, but merely determine whether “there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). “There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. at 249. Speculation is insufficient to defeat summary judgment. Bradley v. Wal-Mart Stores East, LP, 587 Fed.Appx. 863, 866 (6th Cir. 2014). Rather, sufficient evidence, more than a “mere scintilla, ” from which a jury could draw a conclusion in favor of the nonmoving party must be shown. Anderson, 477 U.S. at 252.

         “[T]he standard of review for cross-motions of summary judgment does not differ from the standard applied when a motion is filed by only one party to the litigation.” U.S. S.E.C. v. Sierra Brokerage Servs., 712 F.3d 321, 327 (6th Cir. 2013) (citing Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991). “[T]he court must evaluate each party's motion on its own merits, taking care to draw all reasonable inferences against the party whose motion is under consideration.” Taft Broad. Co., 929 F.2d at 248 (quoting Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)).

         B. Church-Plan Issue

         Congress passed ERISA in 1974 to “remedy certain defects in the private retirement system which limit the effectiveness of the system in providing retirement income security.” H.R. Rep. No. 93-533, at 4639 (1973); see also 29 U.S.C. § 1001. Recognizing the growth of private pensions and the limited regulation of the system, the legislation aimed to “establish minimum standards of vesting, funding, and fiduciary and a system of compulsory benefit insurance to protect the security of pension rights.” H.R. Rep. No. 93-533, at 4643. The statute generally applies to employee-benefit plans, but exempts certain plans, including “governmental plan[s]” and “church plan[s]”. 29 U.S.C. § 1003. At issue in these summary-judgment Motions is whether the employee-benefit plan provided for employees of St. Elizabeth is a church plan and thus not subject to the provisions of ERISA. (Docs. # 129-1 at 1 and 131 at 6).

         1. The Statutory Language

         Under ERISA, for purposes of the church-plan exemption:

A plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches [a church plan] includes a plan 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.

29 U.S.C. § 1002(33)(C)(i) (emphasis added). In other words, this provision-“a mouthful for lawyers and nonlawyers alike” according to the Supreme Court-means that a church plan falls into the ERISA exemption if the plan is established and maintained by a church or association of churches or maintained by an organization with the principal purpose of administering or funding the plan. Stapleton, 137 S.Ct. at 1656; 29 U.S.C. § 1002(33)(C)(i). The latter has been referred to by the Supreme Court as a “principal-purpose organization.” Stapleton, 137 S.Ct. at 1656. Defendants argue that the at-issue Committee is such a principal-purpose organization; they do not seem to argue that St. Elizabeth or the Committee is a “church or . . . a convention or association of churches” under subsection (33)(C)(i). See (Doc. # 129-1 at 8).

         This principal-purpose organization statutory language has been distilled into a three-part test, which other courts[2] have used to determine whether a plan maintained by a principal-purpose organization falls within the church-plan exemption:

1. Is the entity a tax-exempt nonprofit organization associated with a church?
2. If so, is the entity's retirement plan maintained by a principal-purpose organization? That is, is the plan maintained by an organization whose principal purpose is administering or funding a retirement plan for entity employees?
3. If so, is that principal-purpose organization itself associated with a church?

Medina v. Catholic Health Initiatives (Medina I), 877 F.3d 1213, 1222 (10th Cir. 2017); see also Smith v. OSF Healthcare Sys., 349 F.Supp.3d 733, 740 (S.D. Ill. 2018) (appeal pending); Rollins v. Dignity Health, 338 F.Supp.3d 1025, 1035 (N.D. Cal. 2018). A plan that satisfies each prong falls within the church-plan exemption.

         2. Inquiry 1-Is the entity associated with a church?

         The Court must first determine whether the entity “whose employees the plan benefits [is a tax-exempt nonprofit] associated with a church.” Medina I, 877 F.3d at 1222. Pursuant to ERISA, “[a]n organization, whether a civil law corporation or otherwise is associated with a church or a convention or association of churches if it shares common religious bonds and convictions with that church or convention or association of churches.” 29 U.S.C. § 1002(33)(C)(iv). Courts consider a number of factors in determining whether an organization-particularly a healthcare organization-is associated with a church, including: a church's recognition of the organization; the inclusion of language in key documents that evidences a relationship between the organization and a church; denominational requirements for board members, employees, or patients; clear affiliation with a church through denominational chapels; evidence that the organization is guided by a specific church's religious principles; and requirements that certain decisions must be approved by a church's leadership (e.g. the Holy See), among other things. See Medina I at 1222-23 (rejecting the factors elucidated in Lown v. Continental Casualty Co., 238 F.3d 543 (4th Cir. 2001), because the narrow factors did not reflect “the broad language” of the church-plan exemption and instead considering a variety of facts indicating a relationship between the Catholic Health Initiatives and the Catholic Church); see also Smith, 349 F.Supp.3d at 741; Rollins, 338 F.Supp.3d at 1038; Sanzone v. Mercy Health, 326 F.Supp.3d 795, 806-07 (E.D. Mo. 2018).

         The first portion of the three-part inquiry is satisfied here. The relevant entity in this case is St. Elizabeth, as the Plan was developed to provide retirement benefits to St. Elizabeth employees. (Doc. # 132-3 at 5-6) (indicating that “it is the intention of the Employer [St. Elizabeth] to continue to maintain a defined benefit plan for the sole and exclusive benefit of its eligible Employees”). St. Elizabeth is a tax-exempt nonprofit entity. (Doc. # 74 at 5) (conceding that St. Elizabeth is a 501(c)(3) nonprofit corporation); see also (Doc. # 63 at 1-2) (Affidavit of CEO Garren Colvin explaining that St. Elizabeth is a tax-exempt nonprofit). The Court now must determine if there is a genuine issue of material fact as to whether St. Elizabeth is associated with a church. The Court finds that there is no question that St. Elizabeth is associated with the Catholic Church.

         Defendants identify several ways in which St. Elizabeth is associated with the Catholic Church.[3] (Doc. # 129-1 at 10-20). St. Elizabeth was founded in 1861 by Franciscan Sisters of the Poor and the property was acquired “in the name of this Catholic religious order.” Id. at 11; see also (Doc. # 20-3). Sponsorship of St. Elizabeth was transferred to the Diocese of Covington in 1973, (Doc # 63-2), and continues to this day; this is evidenced, for example, by the fact that the Bishop of Covington is the only person with “the authority to dispose of . . . hospital ...

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