HIGHLIGHTS:
- The IRS allegedly has a procedure in place for "signature authority" to initiate a church tax investigation or examination, subject to an independent moratorium on IRS investigations of tax-exempt entities during the pendency of Congress's probe of IRS audits of conservative nonprofits.
- In Horisons Unltd. v. Santa Cruz-Monterey-Merced Managed Med. Care Comm'n, No. 1:14-cv-00123-LJO-MJS, 2014 WL 3342565 (E.D. Cal. July 2, 2014), the court granted in part the defendants' motion to dismiss the plaintiffs' antitrust and other claims arising from its inability to offer indigent healthcare.
- In Diocese of Quincy v. Episcopal Church, No. 4-13-0901, 2014 WL 3672970 (Ill. App. 4 Dist. July 24, 2014), the court affirmed the trial court's finding under the "neutral principles of law" approach that title to funds totaling roughly $3.5 million and real property belongs to a diocese that chose to disaffiliate from the Episcopal Church, and does not belong to a church within the diocese that remained loyal to the denomination and re-created its own loyal diocese.
Timely Topics
If the Internal Revenue Service (IRS) had a moratorium on enforcing §501(c)(3) electioneering restrictions against churches and religious organizations, the IRS states that it has been lifted incident to the settlement and dismissal without prejudice of a case filed by the Freedom from Religion Foundation against the commissioner of the IRS. http://ffrf.org/images/44FFRFvKoskinenOrder.pdf Now, the IRS allegedly has a procedure in place for "signature authority" to initiate a church tax investigation or examination, subject to an independent moratorium on IRS investigations of tax-exempt entities during the pendency of Congress's probe of IRS audits of conservative nonprofits. http://ffrf.org/news/news-releases/item/21074-ffrf-irs-poised-to-settle-church-politicking-suit Settlement followed court action permitting Holy Cross Anglican Church and Father Patrick Malone to intervene in the case for the purpose of arguing that if the IRS has a policy of non-enforcement against churches and religious institutions, that policy is compelled by the Establishment Clause and other laws protecting religious liberty. Some infer that neither party preferred this line of argument. Regardless, in advance of the next campaign cycle, religious organizations are now on notice that the IRS will not exclude them from its general prohibition on participating in, or intervening in, a political campaign on behalf of a candidate for elective public office. Naturally, religious organizations have constitutional rights that must be reconciled with these limitations. Church-state counsel can assist.
Key Cases
Health Entities' Employee Benefit Plan Not a "Church Plan"
In Medina v. Catholic Health Initiatives, No. 13-cv-01249-REB-KLM, 2014 WL 3408690 (D. Colo. July 9, 2014), the court declared that the Catholic Health Initiatives (CHI) Retirement Plan (CHI Plan), an employee benefit plan, is not a "church plan" within the meaning of the Employment Retirement Income Security Act of 1974 (ERISA) because CHI is not a church as opposed to a church-associated organization. The court disregarded the determination letter of the IRS, concluding that the CHI Plan is a church plan. The court also decided that it need not consider legislative history supportive of the defendants because of the plain text of the statute. The court ordered the defendants to reform the CHI Plan to conform with ERISA.
Faith-Based Healthcare Provider States Partial Claim for Antitrust Violation
In Horisons Unltd. v. Santa Cruz-Monterey-Merced Managed Med. Care Comm'n, No. 1:14-cv-00123-LJO-MJS, 2014 WL 3342565 (E.D. Cal. July 2, 2014), the court granted in part the defendants' motion to dismiss the plaintiffs' antitrust and other claims arising from its inability to offer indigent healthcare. The plaintiffs Horisons Unlimited and Horisons Unlimited Health Care (Horizons) are non-denominational religious healthcare providers operating three clinics in Merced County, Calif., serving the "working poor" and Medi-Cal beneficiaries who do not qualify for public assistance. California's Department of Health Care Services requires most Medi-Cal beneficiaries to be assigned to and enrolled in a Medi-Cal managed care plan unless one is unavailable. In 2008, the county established the Central California Alliance for Health (Alliance) as the sole Medi-Cal managed care plan for the county. Alliance refused to temporarily credential any of Horisons' providers and threatened to terminate Horisons' contract with Alliance unless Horisons reduced its average annual number of patient visits. Horisons is threatened with bankruptcy. Horisons claims that, in contrast, Alliance permits its main competitor, Golden Valley Health Centers (Golden Valley), which has a seat on Alliance's board, to use temporarily credentialed professional providers who are similarly-situated to Horisons' professional providers without adverse consequences. Horisons sued, arguing that the county's establishing of Alliance as the sole Medi-Cal managed care plan is a combination in restraint of trade and a monopoly in violation of state and federal law and that defendants are conspiring with Golden Valley to...
