After Week of Silence, Kilmartin Issues Statement on St. Joseph Pension Bankruptcy
Friday, August 25, 2017
Attorney General Peter Kilmartin finally released a statement regarding the St. Joseph’s Health Services Pension Fund, which filed for bankruptcy -- a week ago.
As GoLocalProv was first to report, the filing will impact between 2,000 and 3,000 pension accounts, but the exact number of people affected is not known.
It was Kilmartin who signed off on the deal and the pension payment and structure is now at the eye of the storm. As part of the review of that 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.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTRelative to the 2014 acquisition of St. Joseph, Kilmartin’s only requirement relative to the pension fund was a stipulation that CharterCARE make a $14 million contribution to the pension fund.
In his statement issued Thursday, Kilmartin distanced himself from the pension collapse.
Kilmartin’s Statement
Kilmartin issued the following statement on Thursday:
"The healthcare landscape in Rhode Island has changed dramatically in the past several years. Most of the community hospitals we grew up with are no longer financially viable as stand-alone, independent health centers. Financial realities and the ever-increasing cost of healthcare have resulted in smaller community-based hospitals being scooped up by larger not-for-profit and for-profit healthcare organizations.
Certain transfers in ownership, authority or control of a hospital in Rhode Island require approval by both the Department of Health and the Attorney General's Office pursuant to the Hospital Conversions Act (HCA). While each agency is guided by criteria within the HCA, in general, the review by the Attorney General's Office, restricted by legislative statute, is limited to governance of the new entity, the charitable assets, and conflicts of interest.
The HCA is not all encompassing and the Legislature did not grant the Attorney General's Office the statutory authority to make sweeping demands that are outside the scope of the statute. Specifically, it neither gives the Attorney General nor the Department of Health the authority to oversee or manage private pension funds associated with the healthcare system.
In 2014, the Attorney General's Office reviewed the HCA application submitted by CharterCare - which operated Roger Williams Medical Center, and St. Joseph Health Services of Rhode Island - and Prospect Medical Holdings, a California-based, for-profit healthcare corporation, which operated several hospitals and primary care clinics in California and Texas.
After a thorough review and public comment, my Office and the Department of Health determined the joint venture met the requirements under the limited scope of the HCA and each agency approved, with conditions, the affiliation change.
It is within this context that I would like to address the troubling news and misinformation regarding the pension fund associated with the St. Joseph Health Services petition to the Court for receivership.
Every hospital conversion starts with an agreement between the two parties, which are commonly referred to as asset purchase agreements. The HCA review process includes a review of the asset purchase agreement, and the scope of such review is authorized by the HCA statute.
As noted above, the HCA does not give the Attorney General's Office the authority to oversee or manage private pension funds associated with the healthcare system. That said, as part of the joint venture, the transacting parties did provide both the Department of Health and the Attorney General's Office assurance through the asset purchase agreement that the pension fund would receive an injection of $14 million, bringing the pension fund to 90 percent funded.
I am very concerned and have many questions as to how the pension fund could be insolvent just three years after being funded at 90 percent. While the Attorney General's Office is not directly or indirectly involved with the management of the pension fund, we have engaged with counsel for the Petitioner and the Court-appointed receiver, and will be closely monitoring the legal process, and assessing where we have legal standing to intervene.
The men and women who dedicated their careers working at St. Joe's expected that their pension would be there for them when they retired, and rightfully so. Many, if not most, live on fixed incomes and depend on that monthly pension check to survive. Just as state employee pensioners know all too well, it can be devastating to see your monthly income decrease precipitously because of broken promises.
These retirees deserve to know how this happened and what is being done to protect their investment. I urge the receiver of the pension fund and the Court to establish and maintain complete transparency throughout this process, and to consider every available option to regain financial viability of the pension fund.
If you are a participant in the St. Joseph Health Services of RI pension plan and have questions about the recent court filing, please call 401-865-6249 to contact the Receiver. Here is the website page where the receiver is posting information. You can also send questions or concerns to the Receiver via email at [email protected]. "
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