Lawyers Representing Retirees in Failed St. Joseph Pension Fund Collect Over $13M and Counting

Lawyers Representing Retirees in Failed St. Joseph Pension Fund Collect Over $13M and Counting

According to documents filed with the Rhode Island Superior Court and confirmed by the receiver for the failed St. Joseph pension fund, a collection of attorneys in Rhode Island and Washington, D.C., have been paid more than $13 million.

The legal costs will continue into 2025.

The court-appointed receiver Stephen Del Sesto and special investigator Max Wistow, along with two Washington, D.C. law firms, were tasked with stabilizing the failed pension fund, recovering funds from a range of entities, and transferring the funds to a federal agency that will manage it in the future.

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About $50 million was recovered.

Last week, GoLocal reported that the pension fund is being “rescued” by a little-known federal finance agency called Pension Benefit Guaranty Corporation (PBGC).

Each year, the PBGC takes over multiple failed pension funds — those that were underfunded and/or ravaged by mismanagement or corruption.

Over the upcoming year, the remaining assets in the St. Joseph Pension Fund will be transferred to the PBGC. The fund's balance in November was been depleted down to $45.6 million — a fraction of the funds necessary. When the fund collapsed in 2017 it had a balance of about $80,000 and it was estimated that at that time it was underfunded by $120 million.

Now, the numbers have changed.

PBGC estimates that the St. Joseph Pension Plan is 35% funded with approximately $47 million in assets and about $135 million in benefit liabilities. The plan is underfunded by $88 million.

The sponsor of the plan, St. Joseph Health Services of Rhode Island, Inc., sold substantially all its operating assets in 2014, and in 2017, the St. Joseph Pension Plan was placed into state court receivership. The St. Joseph Pension Plan was originally established as a church pension plan and, as such, was not covered by PBGC insurance. The plan subsequently became covered by PBGC following the sale of the hospital, the appointment of a receiver, and a determination by the Internal Revenue Service that the plan was tax qualified as of 2017.

PBGC is now taking responsibility for the St. Joseph Pension Plan because St. Joseph Health Services has ceased operations and is liquidating. It has been unable to fund the minimum required pension contributions and the Pension Plan is significantly underfunded.

 

Lawyers Fees

The payments to the lawyers and the firms break down as follows:

 

Del Sesto/Pierce Atwood, LLP has been paid $3,252,022

 

Wistow has been paid $9,204,126

 

Bailey & Ehrenberg PLLC - a Washington, DC-based law firm, has been paid $404,000.

 

Tawshunsky Law Firm PLLC - a second Washington, D.C.-based law firm had been paid an additional $282,000

 

In total, the pension fund has paid $13,142,148.

 

Del Sesto told GoLocal that the pension fund should be fully transferred to the PBGC in 2025. It is unknown how much the fund will pay in additional legal fees.