Receiver: St. Joseph Pension Bankruptcy Will Impact As Many as 2,800, 40% Cuts to Benefits
Saturday, August 19, 2017
The bankruptcy of St. Joseph Health Services pension fund will hit between 2,600 and 2,800 existing or future pensioners — and the loss of pension payments may be 40 percent, according to the court appointed receiver Steven Del Sesto, a partner at Donoghue Barrett & Singal. But, DelSesto said the plan for winding down the pension fund is only in the preliminary phase.
The loss of benefits and the total number of beneficiaries impacted may both be records for Rhode Island. The now pending plan before the court, the draft documents would treat all existing and future retirees the same and both classes would take a 40 percent cut to their existing and future benefits, according to court documents. That plan is not final said DelSesto in an interview with GoLocal on Friday afternoon.
Del Sesto was appointed by the court late Thursday afternoon and is yet to talk to many of the players in the collapse. He is scheduled to talk to the Attorney General’s office on Monday.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTQuestions Emerging About Attorney General's Review
Serious questions are emerging about how complete and vigorous was Attorney General Peter Kilmartin’s review of the sale during the Hospital Conversion Act review of the sale of St. Joseph Health Services to CharterCARE in 2014.
As part of the review of that deal, Kilmartin, as Attorney General, had the responsibility to review and approve the financial viability of the transaction. The Hospital Conversion law is very specific to the responsibilities of Kilmartin and his office, “the department of attorney general [is] to preserve and protect public and charitable assets in reviewing both hospital conversions which involve for-profit corporations and hospital conversions which include only not-for-profit corporations.”
Relative to the 2014 acquisition of St. Joseph, Kilmartin’s only requirement relative to the pension fund was a stipulation that CharterCARE make a $14 million contribution to the pension fund.
According to the final agreement, which was approved by Kilmartin in May of 2014, the CharterCARE contribution filled the gap from 90 percent funded to fully funded. But, how just three years later and during a period in Wall Street’s S&P grew by more than 33 percent, could a pension system deemed fully funded by the Attorney General be insolvent.
At the time of the agreement in 2014, Kilmartin said, “The transacting parties have worked diligently to provide regulators with the necessary documentation and information throughout this review process to make this decision, a decision I believe is in the best interest of Rhode Island’s healthcare marketplace, the community, the employees, and most importantly, the patients.”
Kilmartin said in his statement, “Conducting a hospital conversion review requires the commitment of a substantial amount of resources for the Office of Attorney General. I commend my staff for the time and careful consideration put into this review process.” Kilmartin's office has refused to respond to questions from GoLocal regarding the collapse of the fund.
As far as pending retiree payments now scheduled for the first of each month, Del Sesto tells GoLocal that the next two — September 1 and October 1 — he expects will be paid. The total amount of each of those payments is approximately $860,000.
Presently, the fund has about $80 to $90 million, but has a short fall of $43 million according to a report filed by the court by the actuarial firm Angell Pension Group of East Providence.
On Friday, Governor Gina Raimondo's office told GoLocal, “CharterCARE informed our office yesterday (Thursday) afternoon that the pension fund had filed for receivership. The state has no control or oversight over any private organization’s pension fund. We encourage the receiver to work with all potential partners and explore all options to preserve hard-working health care workers’ retirement plans,” said Mike Raia, spokesman for Governor Gina Raimondo.
And the union most impacted by the collapse of the fund - United Nurses and Allied Professionals (UNAP) - said in a statement to GoLocal:
“We are deeply troubled by the potential impact this receivership may have on our members and their families who, for years, have been told they would be able to rely on this fund when they needed it the most.”
The UNAP intends to be centrally involved in the receivership process and looks forward to working with the court-appointed receiver to preserve the benefits of its members.
This receivership raises a number of serious questions regarding how the fund was managed.
We expect the Roman Catholic Diocese of Providence to be transparent about how the fund has been bled and left with a $43 million shortfall and what they plan to do to about it. There is a moral obligation to act soon so that people may retire with dignity and the financial stability the plan was supposed to provide.
Prospect CharterCARE is going to have to answer some tough questions as well. Three years ago, the company represented publicly that a $14 million contribution on their part would bring the funding level up to approximately 90 percent. But something doesn’t add up here."
UNAP represents approximately 650 registered nurses, ancillary and support staff working at Our Lady of Fatima Hospital, which is part of the Prospect CharterCARE network in Rhode Island. Fatima employees and retirees are part of the St. Joseph’s Health Services of RI Retirement Plan.
EDITOR'S NOTE: Receiver Stephen Del Sesto orginally identified the number of retirees impacted as 2,600 to 2,800 in an interview with GoLocal, but revised that number to approximately 2,800 present and future retirees.
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- United Nurses and Allied Professionals Statement on Bankruptcy of St. Joseph’s Retirement Fund
- NEW: Raimondo Gives Comment St. Joseph’s Pension Fund Bankruptcy, Kilmartin Refuses
