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Catholic Church objects federal ruling on pension class-action lawsuit

By on January 24, 2017

SAN JUAN – The Superintendence of the Catholic Schools of the Archdioceses of San Juan objected Tuesday a recent federal court report that gave the green light to a class-action suit filed by Catholic school teachers who allege the church mismanaged their pension plans and failed to comply with Employee Retirement Income Security Act (Erisa).

“The defendants reiterate that the Superintendence of Catholic Schools of the Archdiocese of San Juan by definition is a church. It was created as an office of the Archdiocese of San Juan and each Diocese as established in the Pastoral Letter of Puerto Rican Conference of Bishops, a document cited as authority in regard to the Catholic Church organization in the case of Suriñach v. Pesquera, 604 F2d 73 (1st Cir. 1979),” the superintendence said in its filing.

The magistrate judge, the superintendence said, disregarded the precedent established by the First Circuit Court of Appeals in relation to catholic education and the nature of the superintendence as an integral part of the Catholic Church; therefore, the church itself.

The superintendence was replying to a report and recommendation written by federal Magistrate Judge Bruce J. McGiverin.

At issue is whether the Catholic schools’ pension plan is subject to Erisa or exempt from the federal law as a church plan. According to court documents, the superintendence established the plan in 1979 as an Erisa-covered pension plan for employees of Catholic schools. In March 2016, the superintendence terminated the plan and informed the participants that the plan wasn’t covered by Erisa because it was a church plan.

Pension plans that qualify for Erisa’s church-plan exemption don’t have to comply with certain obligations, including disclosure and funding requirements under the federal law.  

On Jan. 9, McGiverin said the superintendence, which managed the plan, was a “church-affiliated organization” and that the pension plan was not exempted from Erisa.

In his report and recommendation, McGiverin relied on three cases by the U.S. Court of Appeals that have challenged hospitals that treat their pension plans as church plans.

The U.S. Supreme Court is slated to review the three appeals court decisions to decide whether a pension plan must be both “established and maintained” by a qualifying church-affiliated entity to claim the legal exemption.

The teachers argued that the church plan exemption didn’t apply in the case because, while the plan was maintained by a church-affiliated entity, it wasn’t established by the church. As a result, they claim that the administrators of the plan violated Erisa by failing to send required financial reports or take other needed measures to avoid the plan’s insolvency.

People gather outside during a Christmas mass at San Juan Bautista Cathedral in Old San Juan, Puerto Rico, late evening Christmas Eve, Sunday, Dec. 24, 2006. (AP Photo/Brennan Linsley)

People gather outside during a Christmas mass at San Juan Bautista Cathedral in Old San Juan, Puerto Rico, late evening Christmas Eve, Sunday, Dec. 24, 2006. (AP Photo/Brennan Linsley)

 

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