Advisory Opinion 2000-05A

Dear Mr. Abramowitz:

This responds to your correspondence on behalf of the Catholic Health System. You request an advisory opinion concerning whether certain employee benefit arrangements described in your letter are "church plans" within the meaning of § 3(33) of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

You represent that the Catholic Health System (a.k.a. Mercy Health System of Western New York), was incorporated by the Buffalo Regional Community of the Sisters of Mercy of the Americas, a religious congregation of women within the Roman Catholic religious order known as the Religious Sisters of Mercy. You describe retirement and welfare benefit arrangements (collectively, the Plans) of three health institutions that are participating members of the Catholic Health System, namely, Mercy Hospital of Buffalo, New York (Mercy Hospital); Mercy Home Care of Western New York (Mercy Home Care); and Kenmore Mercy Hospital. The benefit arrangements that are the subject of your request include the following: for Mercy Hospital, a pension plan, two health plans, a life insurance benefit arrangement, disability benefit arrangements, and a flexible spending account plan; for Mercy Home Care, a tax-sheltered annuity program and two health plans; and for Kenmore Mercy Hospital, a pension plan, a tax- sheltered annuity program, a health plan, a life insurance benefit arrangement, and a flexible spending account plan.

You submitted to the Department of Labor documentation about the Plans, including private letter rulings issued by the Internal Revenue Service (IRS) concerning the Plans status under § 414(e) Internal Revenue Code (Code). In those private letter rulings, the IRS concluded, based on representations provided by Mercy Hospital, Mercy Home Care and Kenmore Mercy Hospital, that the Plans constituted church plans within the meaning of Code § 414(e). As you know, Code § 414(e) defines the term church plan using language that is virtually identical to ERISA § 3(33).

To the extent that the Plans are currently operated in substantially the same manner as was described to the IRS for purposes of obtaining private letter rulings, we see no reason to disagree with the conclusion reached by the IRS concerning the Plan's status. Accordingly, we conclude that, to the extent the Plan's private letter rulings accurately describe the structure and operations of the Plans, the Plans meet the church plan definition in § 3(33) of ERISA. Section 4(b)(2) of ERISA therefore excludes the Plans from coverage under Title I of ERISA, provided that, as you represent, none of the Plans, if entitled to do so, has made any election pursuant to Code § 410(d). In light of the view expressed above regarding the status of the Plans as "church plans" under Title I of ERISA, it is not necessary for us to determine whether each of the Plans would be an "employee benefit plan" within the meaning of ERISA § 3(3).⁽¹⁾

This letter constitutes an advisory opinion under ERISA Procedure 76-1. Accordingly, it is issued subject to the provisions of the procedure, including section 10 thereof relating to the effect of advisory opinions.

Finally, we note that benefit booklets included in your submission state that ERISA gives certain rights to participants of the Plans and imposes duties on fiduciaries of the Plans. We believe it is important that participants and beneficiaries of the Plans have accurate information concerning the law that governs the plan and the conduct of plan fiduciaries. We expect that appropriate actions will be taken to remove all erroneous references to rights and status under Title I of ERISA from plan documents and literature and that the Plans will promptly notify affected participants and beneficiaries that Title I of ERISA does not apply to the Plans.