Bishop Tobin ‘Prays for Swift and Positive Resolution’ for St. Joseph’s Retirees, Despite Role
Friday, September 15, 2017
“We certainly hope and are praying that this comes to a very positive solution for them as will be possible,” said Tobin. The “them” Tobin refers to is the nearly 3,000 members of the Catholic Church’s former hospital employees whose pensions are now in peril.
Mum on Missing Pension Payments
Tobin chaired the Board of St. Joseph when the hospital sold to Roger William Medical Center, and chaired - or served on the board - when the pension payments were slashed or not made at all, unbeknownst to members of the pension fund.
Presently, the pension fund petitioned the court to be placed in “receivership” and asked that the retirees have their payments slashed by 40 percent.
In an interview in the Diocese’s newspaper, Tobin is quoted as saying, “We, for six or seven years now, have been no more involved in the oversight of pension funds than we have been in the renovation of a lobby. So it’s a little bit frustrating, I think, and unfair for people to be asking what has the diocese been doing during this time.”
But, in fact, the pension fund was managed by three members — one of which was a top ranking Diocese official, Reverend Timothy Reilly. Reilly, like Tobin, has repeatedly refused to answer questions from GoLocal.
Reilly says in another article published in the same edition that the Diocese “is not currently, and has not been, responsible for the ownership, management or oversight of the pension funds in question, and St. Joseph Health Services is not a Diocese entity.”
The assertion by Reilly does not disclose that Reilly himself has been the one constant member on the three-member board since the hospital was sold to CharterCare in 2014.
According to tax records of the pension fund secured by GoLocal, Reilly has served on the board since it was transformed from a full board tied to the operation of the hospital to its present structure as an oversight to the pension fund. Reilly voted to place the fund into bankruptcy and to cut retirees’ benefits.
“This is a matter of a tremendous breach of duty on every level to those folks who worked for so long at the hospital and had an expectation as retirees that they would receive their retirement funds,” said former Rhode Island Attorney General Arlene Violet, in an interview with for a previous article published in GoLocalProv.com.
"This fund presently has the resources to last maybe ten years, but it needs to support retirees for 40 to 45 years," said receiver Stephan Del Sesto.
Building the Defense
Each of the articles and the question-and-answer section in the newspaper reads more like a legal document rather than an outreach to former employees.
Eugene Bernardo, II, a partner in the downtown Providence law firm Partridge Snow & Hahn, refused to respond to questions about the articles and the claims put forth by Tobin and Reilly. GoLocal asked Bernardo if he wrote any of the language or reviewed the articles prior to publication.
According to Bernardo’s bio, “He serves as the general counsel to the Roman Catholic Bishop of Providence and the charitable, educational and religious corporations organized and existing to conduct the temporal affairs of the Roman Catholic Church within the Diocese of Providence.”
Tobin goes on to claim that the shortfall and the “moral” obligations due to the retirees should be placed at the feet of the owners of St. Joseph. “The only entity that can improve the condition of the pension funds now is Prospect Medical Holdings. They’re a billion dollar for-profit corporation. I know when they’ve purchased other hospitals they’ve infused a lot of money into those pension funds to shore them up,” said Tobin in the article.
But, according to a GoLocal review of tax records, in 2008, while the Diocese owned the hospital and Tobin chaired the board, the pension liability was in excess of $50 million and other “retirement obligations were another $3 million. By 2009, the St. Joseph pension liability had jumped to $72 million and the addition "retirement obligations" were $3.1 million.
Related Slideshow: 10 Things to Know About One of Biggest Pension Failures in RI - St. Joseph Bankruptcy
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.”
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.
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.
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