EDITORIAL: Those Who Should Be Protecting Retirees Are Blocking The Effort to Investigate
EDITORIAL
EDITORIAL: Those Who Should Be Protecting Retirees Are Blocking The Effort to Investigate
In August, their pension fund collapsed and was thrust into a receivership. The fund has a shortfall of more than $100 million.
For months, the receiver and special investigator looking into the collapse of the St. Joseph pension fund have been battling two organizations who have refused to comply with subpoenas, refused to turn over documents, and have filed multiple motions trying to block the release of documents.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTWho are the nefarious organizations who would take up such tactics? Big business? An evil for-profit hospital?
God no.
Those fighting to block the investigation have been Attorney General Peter Kilmartin and the Diocese of Providence led by Bishop Thomas Tobin.
That’s right. The Attorney General, whose website states:
As the State’s top prosecutor, the Attorney General fights to enhance the economic security of Rhode Island, protect the public safety of our communities and restore the public trust in state government by fighting corruption.
Oops. The webmaster at the Attorney General's office should clean up this embarrassing typo on the Attorney General’s website.
If anyone has read the motions filed by Kilmartin and seen his staff operate in court, then one would know that the goal of the Attorney General is to block the investigation of the court ordered receiver, to delay delivering materials for weeks, and to file motions and do everything possible to cover-up for the bungled review of the sale of CharterCARE to Prospect of California that enhanced the death spiral of the underfunded pension fund.
The second group who has packed Judge Brian Stern’s court room with legal gyrations has been the Catholic Church — the Diocese of Providence — complete with four lawyers from one of the downtown Providence law firms.
Yes, the same Diocese of Providence that failed to make necessary contributions to the pension fund for years for these men and women creating an exposure of over $100 million in the pension fund.
The irony of the two groups who claim to “protect” those who entrusted them -- the Church and the State -- to now unveil the causes of the collapse, only reaffirms the growing evidence that the Diocese of Providence failed to make required contributions to the fund and hide it from members of the pension fund and that when the Attorney General had the legal responsibility to examine the financial health of the fund — he failed miserably.
For the nearly 2,800 retirees facing brutal cuts to their minimal and desperately need retirement payments the behavior of Kilmartin and Bishop Thomas Tobin is both reprehensible and morally deficient.
10 Things to Know About One of Biggest Pension Failures in RI - St. Joseph Receivership
Biggest Pension Failure Ever in Rhode Island?
There is not a record book, but according to a number of top bankruptcy attorneys, the failure of the St. Joseph Health Services Pension Fund impacts the most individuals and the adverse financial impact will be the highest percentage impact to the retirees' monthly payments in Rhode Island history.
In Central Falls, by 2014 then-Governor Lincoln Chafee signed legislation that upped police and fire beneficiaries to 75 percent of their benefits. The cost of the legislation — post-Central Falls bankruptcy — was $4.8 million.
Kilmartin’s Role in the Hospital Conversion Act
Attorney General Peter Kilmartin won’t answer questions about his role in the approval of the Hospital Conversion of St. Joseph Health Services to CharterCare. GoLocal has repeatedly reached out to Kilmartin to answer questions, without response.
As part of the review of the 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.”
Number Impacted
The bankruptcy of St. Joseph Health Services pension fund will impact between 3,600 and 3,800 existing or future pensioners — and the loss of pension payments may be 40 percent, according to court-appointed receiver Steven Del Sesto, a partner at Donoghue Barrett & Singal.
However, Del Sesto said the plan for winding down the pension fund is only in the preliminary phase.
How Many Are Presently Receiving Benefits
According to the receiver, attorney Stephen Del Sesto, there are 1382 active/vested who have reached retirement date; 639 active/vested who reached early retirement, for a total of 2,021.
On average, retirees are receiving just $425 between the two classes. The retirees are facing a 40 percent reduction — thus, the average retiree would receive just $255 per month.
Kilmartin Called the Plan "Best Interest of...Employees"
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.
How Much Will the Receiver be Paid?
Stephen Del Sesto, the receiver for the St. Joseph Health Services Pension Fund, said he will be paid $375.00 per hour -- which is more than the average retiree will receive per month after the 40 percent cut in benefits.
“My fees will not be paid from the plan assets,” said Del Sesto in an email to GoLocal.
Role of the Diocese of Providence
According to to the document filed with the court seeking bankruptcy protection, the fund or petitioner “has been affiliated with the Catholic Church — “as an affiliate of the Catholic Church, the Plan Qualified as a 'church plan,' which is exempt from the provisions of the Employment Retirement Income Securities Act of 1974 (ERISA) governing defined benefit pension plans.”
And, as a “church plan” the fund and the Diocese were not required to make a minimum contribution to the Plan, or “make pension insurance payments to the Pension Benefit Guaranty Corp."
Will the Receiver Seek a New Actuarial and an Independent Audit?
Stephen Del Sesto, the receiver, said he does not know yet if he will seek an independent actuarial and call for a forensic audit.
He is less than a week in his role and told GoLocal that he would need the court's approval to move forward with both steps.
Big Date
The big date for this case is October 11 -- at that time the receiver Stephen Del Sesto will present the full plan of action.
Payment levels and payment dates will continue at present level, "nothing will change until October 11," said Del Sesto.
Big Question
The biggest question swirling over the sale of St. Joseph's to CharterCARE and the bankruptcy is how could Attorney General Peter Kilmartin approve the sale with the only condition relating to the pension fund was a one-time $14 million payment in 2014 as part of the approval process -- and then just three years later -- the fund collapses.
The present fund has a balance of approximately $85 million. According to court documents filled as part of the bankruptcy petition, the actuarial claims the fund has a shortfall of $43 million.
