U.S. Supreme Court in Washington, D.C. October 9, 2016.
U.S. Supreme Court in Washington, D.C. October 9, 2016. (Photo: Mike Scarcella/ALM)

After a lull in adding new cases to the term, the U.S. Supreme Court on Friday agreed to hear arguments in seven challenges, including a trio of cases from religious-affiliated, nonprofit health care systems that are seeking exemptions from federal law for their pension plans.

The health care systems, represented by Arnold & Porter’s Lisa Blatt, contend they qualify as “church plans” that are exempt from the insurance premiums, requirements and protections of the federal Employee Retirement Income Security Act, or ERISA.

Three federal appeals courts—the Sixth, Seventh and Ninth circuits—agreed with class action challenges brought by two law firms, Cohen Milstein Sellers & Toll and Seattle’s Keller Rohrback.

The firms argued that the health plans were not “established by a church,” the requirement for the exemption.

Blatt said in her petitions that the circuit decisions defy 30 years of administrative rulings that church plans do not have to be established by a church. The two law firms, she said, seek “billions of dollars in retroactive liability and a wholesale upheaval in the administration of pension plans affecting religious employers and employees across the country.”

But the challengers counter that “hundreds of church-associated hospital conglomerates, often at the urging of ‘gotcha’ benefit consultants, have in recent decades exploited a misreading of ERISA to lower their costs by claiming church-plan status for plans that had been operated—correctly—as ERISA plans.”

The three cases are Advocate Health Care v. Stapleton; St. Peter’s Healthcare v. Kaplan, and Dignity Health v. Rollins.

The justices will delve into another pension issue in a very different context—military pensions and divorce. In Howell v. Howell, the court will examine the Uniformed Services Former Spouses’ Protection Act and the meaning and application of “disposable retired pay.”

The addition to the docket of Impression Products v. Lexmark International continues the high court’s fascination with patents—here, the scope of the patent exhaustion doctrine.

The case involves the sale of toner cartridges used in printers. Impression, based in Charleston, West Virginia, buys cartridges that Lexmark initially sold in and outside of the U.S. Lexmark wants customers to return unused cartridges and not sell them to a remanufacturer like Impression.

The U.S. Court of Appeals for the Federal Circuit rejected arguments by Impression and the government that any sale by a patentee automatically exhausts the patentee’s rights to the article sold. The court also said that importing patented articles sold abroad constitutes infringement, unless the patentee has permitted the importation.

Mayer Brown’s Andrew Pincus, the lawyer for Impression, said in the petition: “Indeed, the questions are so consequential—and this case is such an ideal vehicle for resolving them—that the Federal Circuit, acting sua sponte, took the extraordinary step of initially hearing this case en banc.”

Two other cases the court added:

►In Los Angeles County v. Mendez, the justices will again examine claims of excessive use of police force under the Fourth Amendment.

►In Water Splash v. Menon, the court takes up an issue only lawyers can love: whether the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters authorizes service of process by mail.

Read more:

Religious Health Care Systems Push Back Against Pension Suits in Supreme Court