Ursula Mayer v. Mercy Health Services, LLC d/b/a Mercy Health and Life Insurance Company of North America d/b/a Cigna Group Insurance

Ursula Mayer (“Mayer”) was an employee of Mercy Health Services, LLC (“Mercy”) and was covered under a long-term disability insurance policy which was issued by Cigna Group Insurance (“Cigna”). She claimed that she was totally disabled according to the definition within the policy, that she applied for benefits with Cigna, and that her claim was denied. Mayer also claimed that the long-term disability plan in question should be considered a “church” plan, and therefore the “contract is subject to the law of the State of Missouri.”

In support of her argument, Mayer explained that “Mercy is organized exclusively for religious, charitable, scientific, and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code;” that “Mercy Articles of Incorporation require that Mercy operate to serve the mission of the Roman Catholic Church” and that it functions “to evidence the policies of the Sisters of Mercy and Mercy Health Ministry.” Further, “Mercy adheres to and is guided by the Ethical and Religious Directives for Catholic Health Services of the National Conference of Catholic Bishops.” Mercy also includes as its values “wisely us[ing] our talents and resources to strengthen Mercy as a ministry of the Church.” Mercy is also “associated with a church or a convention or association of churches” and its articles of incorporation “affirm its obligation to act in conformity with the teachings of the Catholic Church and the Sisters of Mercy.”

In response, Cigna argued that the policy was connected to an “employee welfare benefit plan,” therefore it should be subject to ERISA. Cigna also cited that “Mercy reported that it filed ERISA reports” and “provided an ERISA plan name and ERISA plan numbers in conjunction with its short term and long term disability policies.” It also explained that Mercy “has been filing ERISA Form 5500s” related to the long-term disability plan from “at least 2009” onward.

At this point, Mayer began to cite previous actions where Mercy itself argued that its pension plan is exempt from review under ERISA since it is controlled by the Catholic Church. According to the doctrine of judicial estoppel, Mayer argues that Mercy cannot now argue in a manner inconsistent with previous proceedings. In response to this, the Court determined that even though Mercy may have argued that its pension plan is a church plan that did not mean that Mercy could not argue that its long-term disability plan is not a church plan. Further, “Defendants have the burden to establish that the . . . LTD Plan is not a church plan and thus subject to ERISA” but the Court did not have sufficient facts to determine same. Therefore, it allowed the parties a limited amount of time to conduct discovery on this issue.

Here, the overarching issue is determining which court can hear the matter. Chronister v. Baptist Health, 443 F.3d 648 (8th Cir. 2006) cited that if an employee benefit plan is indeed a “church plan,” then it is not subject to ERISA and the court “must remand the matter to state court.” However, if the employee benefit plan is not a “church plan,” it is not exempt from ERISA and must stay in federal court.  Two additional issues that the Court posed are: “(1) what is the relationship between SMHC [Sisters of Mercy Health Care System, St. Louis, Inc.], Mercy Health, and the Sisters of Mercy; and (2) does that relationship establish the SMHC LTD Plan as a Church Plan within the meaning of ERISA?”

The Supreme Court case Advocate Health Care Network v. Stapleton, 137 S.Ct. 1652 (2017) explained that “ERISA provides (1) that a ‘church plan’ means a ‘plan established and maintained . . . by a church’ and (2) that a ‘plan established and maintained . . . by a church’ is to ‘include [  ] a plan maintained’ by a principal-purpose organization,” “a plan maintained by a principal purpose organization therefore qualifies as a ‘church plan,’ regardless of who established it.”

Mayer asserted that “Mercy Health is associated with a church;” and “Mercy Health Maintains the LTD plan” thus “the LTD Plan is a church plan exempt from ERISA.” Alternatively, Cigna claims that “Plaintiff’s Motion to Remand and Supplemental Memorandum establish only what has been undisputed from the outset of this litigation, namely that Mercy Health is controlled by or associated with the Catholic Church.” The Court agreed with this statement, explaining that Mayer has not provided evidence of whether the long-term disability plan is indeed a church plan.

Cigna also argued that because of the Advocate case, “a plan seeking church plan status under ERISA § 1002(33)(C)(i) must satisfy two distinct requirements: 1. The organization that maintains the plan must have, as its ‘principal purpose or function’ the ‘administration or funding of the plan’; and 2. The organization must be associated with or controlled by the church.” Cigna goes on to explain that “Mercy Health is not a Principal Purpose Organization because its principal purpose or function is not to administer or fund the LTD Plan . . . [and] since 2000, there has not been any entity that has as its principal purpose the maintenance of the LTD Plan.” Lastly, Cigna cited that the administration of the LTD Plan was passed on to SMHC, the predecessor to Mercy Health. The Court pointed out that this seemed to indicate Mercy’s status as a religious organization which is relevant to determining that the long-term disability plan may be a church plan.

Overall, the Court decided that it was not provided with sufficient information in order to determine whether the Plan is a church plan or not. By law, the Court is “required to resolve all doubts about federal jurisdiction in favor of remand.” Therefore, to err on the side of caution, it remanded the case to the Circuit Court for the City of St. Louis, Missouri, because Cigna did not establish that the instant Court had jurisdiction of the case.

[Note: this claim was not handled by the Ortiz Law Firm. It is merely summarized here for a better understanding of how Federal Courts are handling long term disability insurance claims.]


Here is a copy of the decision in PDF:

Mayer v Mercy and LINA

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