Blogging Employee Benefits

March 23, 2006

Church Plan Exemption Inapplicable to Religious Hospital’s Disability Plan

Filed under: Church Plan, Disability, Litigation — Fuguerre @ 7:10 pm

A disability plan sponsored by a Baptist hospital does not qualify for exemption from ERISA as a church plan, according to an 8th Circuit ruling affirming the district court’s denial of motion to remand to local jurisdiction. However, the 8th also affirmed the district court’s judgment instructing the plan administrator to re-open the administrative record and re-determine the claim, finding the original benefits denial to lack support. [Chronister v. Baptist Health, No. 05-1565]

The claimant appealed removal of the case to federal district court, arguing that the Baptist hospital where she had been employed is a religion-based hospital whose disability plan is exempt from ERISA as a church plan. The hospital is a charitable organization sharing common religious bonds and convictions with the Baptist church, including a prohibition against elective abortions. Leaders of the organization are required to be members of Baptist churches, and the organization has not elected ERISA coverage. The court disagreed, observing that the Baptist convention had not been involved in governance of the hospital for nearly 40 years, does not appoint or approve the hospital’s board members, and restricts its denominational requirement to a limited group of hospital employees. Accordingly, the court ruled the hospital’s disability plan an ERISA plan, not a church plan.

The plan administrator’s denial of benefits was reviewed under the abuse-of-discretion standard, since the plan granted discretionary authority. a less deferential standard was denied, there being insufficient evidence of conflict or procedural irregularity. Nevertheless, the plan administrator had terminated disability benefits after 24 months solely on the basis of a plan provision restricting benefits for “self-reported symptoms” despite objective medical evidence that precluded reliance on that plan provision. Accordingly, the appellate court affirmed the district court’s decision to remand the case to the plan administrator for a new determination of the claim.

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