EXCLUSIVE: Major RI Pension System Files for Bankruptcy
Friday, August 18, 2017
This is one of the largest pension failures in Rhode Island in recent history. It will take months to determine the total financial impact on the pensioners.
Kilmartin Signed Off
According to sources close to the matter, somewhere between 2,000 and 3,000 pension accounts will be impacted, but the exact number of individuals affected is not known.
The triggering event was a decision by the Diocese of Providence to exit the system. The fund is not connected to CharterCARE or their parent company, Prospect.
It was Attorney General Peter Kilmartin who signed off on the deal and the pension payment and structure is now at the eye of the storm. 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.”
In 2014, 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.”
As part of the agreement to purchase the group of hospitals in Rhode Island under the state’s Hospital Conversion Act, CharterCARE made the required $14 million contribution to the pension fund as part of the global agreement.
Late Thursday evening, GoLocal was provided by the following statement by R. Otis Brown, Vice President, Marketing & External Affairs of CharterCARE Health Partners:
We understand how difficult this situation is for those employees and retirees who are impacted by the pension fund’s decision to file for receivership.
It is important to note that the pension fund (the “Pension”) is not connected to either CharterCARE Health Partners or Prospect. The pension fund was organized by St. Joseph Health Services of Rhode Island, Inc., a separate organization that retained control of certain assets and liabilities that were not transferred to the purchaser when the transaction with Prospect was completed three years ago. Neither CharterCARE Health Partners nor Prospect have any oversight or control of the Pension.
The final approval issued for the sale was signed on May 19, 2014. According to the agreement, “PMH [Prospect] will acquire certain assets of CCHP for $45 million and thereby acquire an 85% interest in the existing hospitals. CharterCARE Health Partners will retain a 15% interest in the existing hospitals.The $45 million will be used to retire the long term debt of the existing hospitals ($31 million) and to increase the funding of the SJHSRI pension plan to greater than 90% ($14 million).”
Efforts to reach the Diocese communication department were unsuccessful on Thursday evening.
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