EXCLUSIVE: St. Joseph Pension Fund Shortfall is More Than $160 Million
Monday, August 28, 2017
GoLocal reviewed hundreds of pages of federal tax documents, St. Joseph’s audited financials, and reports produced by the fund’s actuarial firm. Those documents unveil that the now-bankrupt pension fund had a $128 million deficit, after the Attorney General approved the sale of the hospital to CharterCARE in 2014.
Following the Money
As part of the sale, CharterCARE was required to make a $14 million contribution to the pension fund. The claim was that the one-time payment made the pension fund 90 percent funded.
In the following year ending June 30, 2015, the fund’s actuarial reported to the Board of the fund that $14.7 million was needed to fully fund the pension.
The next year ending June 30, 2016, the actuarial reported that the contribution necessary to fully fund the pension had ballooned to $32.3 million.
Court appointed receiver Stephen Del Sesto substantiated GoLocal’s review and told GoLocal, “Yes, there is an injustice to the pension holders.”
“This case is disappointing and troubling…no one gave the retirees any insights into the condition of their fund," said Del Sesto.
The reports were produced by Angell Pension Group, Inc. of East Providence. Repeated efforts to reach the President Jeffrey Bauer were unsuccessful. He would not respond to phone messages or emails.
The reports by Angell were delivered to the Board of the pension fund, which was comprised of three members after the hospital was sold to CharterCARE and the pension fund was left as a de facto orphan fund.
The three Board members according to the last available 900 form are Daniel J. Ryan, President of the Board; Reverend Timothy Reilly of the Diocese of Providence; and Dr. Joseph Mazza, a cardiologist at Roger Williams Hospital. Efforts to reach Ryan, Chairman of the non-profit, were unsuccessful.
“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 GoLocalProv.com on Sunday night.
"This fund presently has the resources to last maybe ten years, but it needs to support retirees for 40 to 45 years," said Del Sesto.
Failure to Look at Fund
Violet raised further questions about the role of Peter Kilmartin, Rhode Island's current Attorney General. Under the Hospital Conversion Act, the Attorney General is required to review the financial viability and impact of the transaction.
"The retirees had no idea there were any issues with the viability of the fund until it filed for bankruptcy," said Del Sesto. "There were a number of entities that had a responsibility, including the Attorney General."
The Hospital Conversion law is very specific to the responsibilities of Kilmartin and his office, stating, “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.”
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.”
On Friday, GoLocal reported that a wide array of Rhode Island leaders called for Kilmartin to step aside in an investigation. Those calling for the Attorney General to recuse himself, included: Speaker of the House Nicholas Mattiello, Cranston Mayor Allan Fung, Violet, potential Attorney General candidate Ted Siedle, and the union representing many of the active workers in the fund.
As GoLocal reported:
"A growing chorus of Rhode Island leaders tell GoLocalProv.com that Rhode Island Attorney General Peter Kilmartin should step aside and an independent investigator should be appointed to look into the bankruptcy of the St. Joseph Health Services pension fund.
The collapse affects nearly 3,000 retirees and workers and looks to be the largest pension fund collapse in Rhode Island history.
Included in the group calling for Kilmartin to step aside is the union that represents many of the workers in the fund.
United Nurses and Allied Professionals (UNAP) general counsel Christopher Callaci released the following statement to GoLocalProv on Friday. 'As we've said, we agree with the Senate President's suggestion that there should be an investigation. We have the greatest respect for the career prosecutors and staff in the Office of Attorney General. However, given that the office played a pivotal role in allowing this deal to move forward in 2014, we believe it is in the best interest of our members and retirees if an independent party led any such investigation. Either way, we intend to continue pursuing what factors led to the pension funds insolvency,' said Callaci."
St. Joseph Pension Fund Documents, August 18, 2017
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- United Nurses and Allied Professionals Statement on Bankruptcy of St. Joseph’s Retirement Fund
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