U.S. Supreme Court Rules in Favor of Dignity Health June 15, 2017 – Modern Healthcare In an important victory for Manatt client Dignity Health and other faith-based hospital systems across the country, the U.S. Supreme Court issued a unanimous decision in favor of the healthcare provider-petitioners on June 5, 2017, in Rollins v. Dignity Health. The Supreme Court’s far-reaching ruling overturned three federal appellate court decisions which held that ERISA’s religious exemption provision for “church plans” did not apply to pension plans established and maintained by church-affiliated organizations such as faith-based hospitals. Dignity Health’s case was one of the lead cases in more than 35 class actions across the country in which the plaintiffs challenged the church plan status of church-affiliated organizations’ defined benefit pension plans. Manatt represented Dignity Health in the trial court and was co-counsel on the Supreme Court briefs. The litigation team was led by partners Barry Landsberg and Harvey Rochman, and included partners Joanna McCallum, Donald Meaders and Craig Rutenberg, with associate Colin McGrath. The underlying action began as a putative class action brought on behalf of Dignity Health’s approximately 60,000 employees, claiming that Dignity Health’s pension plan was not, in fact, exempt from ERISA and, falsely, that Dignity Health had underfunded its pension plan by $1.2 billion. Manatt litigators took over the case after an initial motion to dismiss was not granted, with that ruling essentially declaring that Dignity Health’s pension plan was never an exempt church plan because Dignity Health, which is not a church, had established the plan. Manatt convinced the judge to certify the legal issue for interlocutory appellate review and then convinced the Ninth Circuit to take the case. The Ninth Circuit ruled against Dignity Health and tried to return the case to the district court to determine issues such as the billions in penalties the plaintiff was seeking. The Supreme Court, however, decided to stay the Ninth Circuit’s ruling pending its decision to grant certiorari, which the Supreme Court granted in September 2016. The decision was widely covered by the media, including Modern Healthcare. Read the article here.
