Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Smith v. OSF HealthCare System

United States Court of Appeals, Seventh Circuit

August 13, 2019

Sheilar Smith, et al., on behalf of themselves and all others similarly situated and on behalf of the OSF plans, Plaintiffs-Appellants,
v.
OSF HealthCare System, et al., Defendants-Appellees, and United States of America, Intervening-Appellee.

          Argued May 15, 2019

          Appeal from the United States District Court for the Southern District of Illinois. No. 3:16-cv-00467-SMY-Rp - Staci M. Yandle, Judge.

          Before WOOD, Chief Judge, and Easterbrook and Hamilton, Circuit Judges.

          HAMILTON, CIRCUIT JUDGE

         The decisive issue in this appeal is whether the district court abused its discretion in granting summary judgment for defendants despite plaintiff's motion under Federal Rule of Civil Procedure 56(d) to postpone a summary judgment decision so that she could complete further discovery. District courts have considerable discretion in such case-management decisions, but that discretion is not unlimited. The record here shows, unfortunately, that the court's denial of plaintiff's Rule 56(d) motion was an abuse of that discretion. The summary judgment motion was filed long before discovery was to close; plaintiff was pursuing discovery in a diligent, sensible, and sequenced manner; and the pending discovery was material to the summary judgment issues. The district court's explanation for denying a postponement overlooked the court's earlier case-management and scheduling decisions and took an unduly narrow view of facts relevant to the case.

         We therefore vacate the grant of summary judgment and remand for further proceedings consistent with this opinion. We explain in Part I the role and definition of the ERISA exemption for "church plans." In Part II, we summarize the limited facts available to us about these parties and the merits of their dispute. In Part III, we address the standards for Rule 56(d) motions and potential reasons for denying them. We do not decide the merits of the parties' dispute, though we must discuss the merits along the way to provide context for the Rule 56(d) issue.

         I. ERISA and the Exemption for Church Plans

         The underlying issue in the case is whether the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., applies at all to the pension plans offered by defendant OSF HealthCare System, a religious nonprofit organization that operates eleven hospitals in Illinois and Michigan.

         ERISA sets minimum standards for the pension and welfare benefit plans offered by private employers. 29 U.S.C. §§ 1001(a), 1002(1)-(2). Congress enacted ERISA in response to a "rapid and substantial" increase in employee benefit plans that were lacking in "adequate safeguards"-with often-catastrophic results for employees and their families-as employees and their beneficiaries lost anticipated benefits because of unsound and unstable plans, unfair vesting provisions, and termination of plans before benefits had been funded. 29 U.S.C. § 1001(a).

         The Supreme Court has described ERISA as a "'comprehensive and reticulated statute' with 'carefully integrated civil enforcement provisions.'" LaRue v. DeWolff, Boberg & As-socs., Inc., 552 U.S. 248, 258 (2008), quoting Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985). At bottom, the goal of ERISA is to ensure the delivery of promised benefits. To achieve that goal, ERISA imposes minimum standards for benefit funding and vesting, grievance and appeals processes, and fiduciary duties. 29 U.S.C. §§ 1053, 1083, 1104, 1132. Participants of benefit plans that are governed by ERISA have the right to sue for benefits and breaches of fiduciary duty. 29 U.S.C. §§ 1132, 1109. If ERISA plans are terminated without adequate funding, some payments of benefits can be available through the Pension Benefit Guaranty Corporation. 29 U.S.C. § 1302.

         Congress, however, exempted certain categories of employee benefit plans from ERISA. One is the "church plan" exemption at issue here. 29 U.S.C. § 1003(b)(2). Since enactment in 1974, ERISA has provided that it "shall not apply to any employee benefit plan if... such plan is a church plan (as defined in section 1002(33) of this title)." Id. The definition in § 1002(33) originally applied only to plans "established and maintained" for the employees of churches or associations of churches, so that it would not have applied, for example, to hospitals affiliated with churches. Advocate Health Care Network v. Stapleton, 137 S.Ct. 1652, 1656 (2017); 29 U.S.C. § 1002(33)(A). In 1980, Congress amended the church plan exemption. Under the amended version, the exemption extends not only to plans for employees of churches but also to plans for employees of church-affiliated organizations. 29 U.S.C. § 1002(33)(C)(ii)(II).

         Central to this case, the amendment added the following language:

A plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches 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). That's "a mouthful," as the Supreme Court said, but "to digest it more easily, note that everything after the word 'organization' in the third line is just a (long-winded) description of a particular kind of church- associated entity." Advocate Health, 137 S.Ct. at 1656. The Court referred to the church-associated entity as a "principal-purpose organization/' id., and for clarity's sake, so do we.

         In Advocate Health, the issue was whether the church plan exemption depends on who first established the plan. The Supreme Court held: "Under the best reading of the statute, a plan maintained by a principal-purpose organization ... qualifies as a 'church plan,' regardless of who established it." Id. at 1663. The language in § 1002(33)(A) and (C)(i) thus makes the church plan exemption available to pension plans and other employee benefit plans established by church-associated entities, such as church-associated hospitals, where the plans are maintained by principal-purpose organizations. Id. We now turn to the facts of this case, where the central issues on the merits are who qualifies as a principal-purpose organization and what it means to "maintain" or "administer" an employee benefit plan.

         II. The Parties, Their Pension Plans, and Their Dispute

         The Sisters of the Third Order of Saint Francis, a Roman Catholic organization, founded the OSF HealthCare System in 1880. OSF is a nonprofit Catholic healthcare system that provides free or discounted care to indigent patients. The Sisters of the Third Order of Saint Francis is the only member of OSF. The Order maintains authority over the system through OSF's governing documents and the canonical and civil guidelines pertaining to church property. In 2014, OSF merged with another Catholic hospital, St. Anthony's Health Center, with the permission of the Holy See. Prior to the merger, St. Anthony's was run by the Sisters of St. Francis of the Martyr of St. George. We refer to these organizations collectively as "OSF."

         The parties agree that OSF is associated with a church. OSF's operation is intertwined with the Roman Catholic Church. For example, among several other religious requirements not relevant here, OSF must seek approval from the Church for loan and debt financing, is subject to oversight by the bishops of the dioceses in which it operates, and is recognized by the Official Catholic Directory as a Catholic Institution.

         OSF and St. Anthony offered pension plans to their employees before the merger. After the merger, the OSF and St. Anthony's pension plans remained distinct. The Plans have approximately 19, 285 participants between them. The Plans are now closed to new participants and have stopped accruing further benefits. The OSF plan has 17, 946 participants and the St. Anthony's plan has 1, 339. Both plans are now administered as ERISA-exempt church plans.[1]

         OSF contends that the St. Francis Plan and the St. Anthony's Plan are administered by the Sisters of the Third Order of St. Francis Employees' Pension Plan Administrative Committee and the Saint Anthony's Health Center Retirement Committee, respectively, though the two have identical memberships. (We refer to them as the "Committees.") OSF contends that each Committee qualifies as a principal-purpose ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.