District Court Grants Summary Judgment to Lincoln National, Rejecting Church Plan Exemption in ERISA Disability Benefits Dispute

In Peterson v. Lincoln Nat’l Life Ins. Co., No. 4:23-CV-40097-MRG, 2025 WL 1000689 (D. Mass. Mar. 31, 2025), an action alleging state law claims to recover long-term disability benefits, Massachusetts District Judge Guzman granted summary judgment to Defendant Lincoln National Life Insurance Company, finding that the long-term disability plan at issue was subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), and was not a “church plan” subject to exemption from ERISA.

Plaintiff, Deborah Peterson, was an employee of Notre Dame Health Care Center, Inc. (NDHCCI), a non-profit organization affiliated with the Roman Catholic Church, until October 2020, when she claimed disability due to a progression in her scoliosis and kyphosis conditions. NDHCCI, a 501(c)(3) organization included in The Official Catholic Directory, provided a suite of employee benefits including a long-term disability (LTD) plan funded by a group insurance policy from Lincoln National. The crux of the dispute involved whether this benefits plan was subject to ERISA’s regulatory framework or exempt as a church plan.

The Court’s analysis began with determining whether the plan was an “employee welfare benefit plan” under ERISA. The Court found that NDHCCI’s plan met all five essential elements outlined by the First Circuit for ERISA applicability: it was a plan, established and maintained by an employer (NDHCCI), for the purpose of providing disability benefits to its employees. Notably, NDHCCI’s acknowledgment in its insurance application that the plan was subject to ERISA further supported this determination.

The central legal question then shifted to whether the plan qualified for the church plan exemption under ERISA. This required interpreting 29 U.S.C. § 1002(33), which defines a church plan as one established and maintained by a church or a convention or association of churches, and includes plans maintained by a principal-purpose organization associated with a church.

Peterson argued that the plan qualified as a church plan because NDHCCI is a church-affiliated entity, thereby making its employees “employees of a church” under § 1002(33)(C)(ii) and thus deeming NDHCCI itself a church for plan purposes. However, the Court rejected this interpretation, aligning with a majority of federal courts that have addressed similar arguments. The Court emphasized the plain text and legislative intent of ERISA, which only provides two avenues for a plan to be deemed a church plan: (1) plans established by a church or convention of churches, and (2) plans maintained by a principal-purpose organization. The court found no textual basis for extending the exemption to all entities merely associated with a church, as argued by Peterson.

The Court concluded that NDHCCI did not fall into either category. NDHCCI is not a church, and there was no evidence of it being a principal-purpose organization dedicated to administering church plans. Consequently, NDHCCI’s plan did not qualify for the church plan exemption and was subject to ERISA’s regulatory scheme.

Having determined the plan was subject to ERISA, the court addressed the preemption of Peterson’s state law claims. Under ERISA’s broad preemption provisions, codified in 29 U.S.C. § 1144(a), state laws that “relate to” an ERISA plan are preempted. The court found that Peterson’s claims for breach of contract and violations of Massachusetts consumer protection laws sought remedies for denied benefits, directly implicating the plan administered under ERISA. As a result, these claims were preempted because they related to the ERISA-governed plan.

The Court granted summary judgment in favor of Lincoln National Life Insurance Company, dismissing Peterson’s state law claims without prejudice to her ability to file a new action asserting claims under ERISA. This outcome underscores the rigorous statutory framework governing ERISA and the challenges in navigating its exemptions, particularly the narrow scope of the church plan exemption.

If Lincoln or your disability insurer has denied or otherwise limited your ERISA benefits claim, contact us for assistance.