DelSesto, Receiver for Failed St. Joseph Pension Fund, Unveils Next Steps in Investigation
Sunday, January 28, 2018
GoLocalProv News Team
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Stephen DelSesto, Receiver
Stephen DelSesto, the receiver for the failed St. Joseph pension joined GoLocal LIVE on Friday and unveiled a number of updates on the investigation and the timeline for pensioners. A GoLocal investigation found in December that over forty plus years, the Diocese of Providence underfunded the St. Joseph Health Service pension fund by more than $100 million.
Now, receiver Stephen Del Sesto confirms to GoLocal that the pension fund is actually underfunded by approximately $125 million to pay all of the more than 2,700 plan participants through to actuarial expected funding needs.
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When the pension fund of St. Joseph Health Services was thrust into receivership in August, court documents filed claimed the fund was underfunded by $43 million. The pension fund was created in the late 1960s, and according to pension plan members, they have always received mailings confirming that the fund was in good standing.
Related Slideshow: 10 Things to Know About One of Biggest Pension Failures in RI - St. Joseph Receivership
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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.
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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.”
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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.
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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.
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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.
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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.
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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."
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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.
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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.
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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.
Related Articles
- Five Major Developments in St. Joseph Pension Fund Collapse
- Investigation: Diocese Claims False - Board Directed Only $14M in Payment to St. Joseph Pension Fund
- Should Hospital Merger Process Be Changed After St. Joseph Pension Fund Receivership?
- St. Joseph Receiver Del Sesto Warns Cuts Are Likely to Be Implemented in 2018
- Wistow Files First Subpoena in St. Joseph Pension Fund Receivership Case
- VIDEO: Governor Raimondo Calls for Investigation into St. Joseph Pension Fund Bankruptcy
- RI Treasurer Magaziner Talks ‘Back to Basics’, College Costs, and St. Joseph’s Pension Fund
- St. Joseph’s Pension Fund Bankruptcy Could Be Just One of Many in RI
- Will Kilmartin Be Sued for Role in St. Joseph’s Pension Fund Bankruptcy?
- Diocese, RWMC and CharterCARE All Failed to Make Millions in Pension Payments to St. Joseph
- Bishop Tobin ‘Prays for Swift and Positive Resolution’ for St. Joseph’s Retirees, Despite Role
- St. Joseph Receiver Del Sesto to Meet with Raimondo, Ruggerio Proposes Bill
- VIDEO: Violet Hosts Meeting for Hundreds of St. Joseph Pension Fund Retirees
- 1,000 St. Joseph Retirees Hear Horrors of Impact of Pension Fund Collapse
- Former U.S. Attorney Says Hospital Conversion Act Needs Review to Avoid Another St. Joseph’s
- St. Joseph Pensioner Quinn Worked 34-Years and Now Facing Cuts to Her $500 a Month Payment
- Key Trust Document Shows Bishop of Providence Has Oversight of Failed St. Joseph Pension Fund
- INVESTIGATION: Diocese Underfunded St. Joseph Pension Fund by $100 Million
- LIVE: Whitcomb on Al Franken’s Demise, St. Joseph’s Pension Debacle, and More
- Kilmartin Knew of St. Joseph’s Pension Collapse 10 Days Before Failure
- Judge Stern Shoots Down Prospect and Attorney General in St. Joseph Pension Fund Collapse
- Coming Monday - INVESTIGATION: The Real Cost of the St. Joseph Pension Fund Collapse
- Diocese, Kilmartin’s Legal Delays Are Increasing Costs to Recover Monies For St. Joseph Pension
- Callaci: Memorial Hospital’s Closure & St. Joseph Pension Failure Show State of Healthcare
- Kilmartin Tries to Block Release of Records in St. Joseph Pension Fund Collapse
- Diocese Fights to Quash Subpoena for St. Joseph Pension Fund, Wistow Fires Back
- Judge Slams Kilmartin for Delaying Release of Documents in St. Joseph Pension Fund Collapse
- DelSesto, Receiver for Failed St. Joseph Pension Fund, Unveils Next Steps in Investigation
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