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An ERISA Exception

Posted by David P. Martin | Oct 06, 2016 | 0 Comments

The Church Plan

Is every employee benefit claim governed by ERISA? There are a few exceptions to ERISA, but it may take counsel experienced in ERISA to prove this. The Middle District of Alabama in Lawrence et al., v. Nation, et al. articulated how the church plan exception (as it is called in case law) is met in a life insurance case. The exception refers also to synagogues, temples or other institutions of worship. The plaintiffs filed suit in state court for fraud, misrepresentation, suppression, bad faith and breach of contract. The defendants promptly removed the case to federal court claiming that ERISA pre-empted all claims.

The court first noted that the defendant had the burden of establishing the basis of removal jurisdiction, and therefore the plaintiffs were not obliged to come forth with evidence proving that the plan was endorsed by a church. The court also found that the fact the church was incorporated did not exclude it from being a church. Further the fact that there was a designated president did not preclude it from being considered a church. Accordingly, the court concluded that the plan qualified as a church plan exempt from ERISA.

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