St. Joseph Pension Fund Collapse—A Week of Inaction, Action, and Reaction
Sunday, June 09, 2019
It has been a week of action, inaction, and reaction in the St. Joseph pension fund collapse. The state’s largest pension failure now is nearly two years old and the members of the pension fund got their first solid win.
But, the fund faces a massive number of challenges moving forward and most concerning is that there is no word from the federal agency that regulates and insures pensions.
The pension funds 2,700 members face a shortfall of more than an estimated $118 million.
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Inaction
In early May, receiver Stephen Del Sesto took the unprecedented action of moving the St. Joseph Health Services pension fund to the control of the federal Pension Benefit Guaranty Corporation (PBGC). This action will force the fund to be treated under the Employee Retirement Income Security Act of 1974 (ERISA) — the federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.
Now, a month later Del Sesto has received no word from the agency.
Action
Federal Court Judge Will Smith issued a ruling sending $11.9 million from CharterCare’s Community Board to the pension fund.
“Settling Defendants will make an initial lump sum payment of at least $11,150,000 to the Receiver. RHW will also assign to the Receiver its interest in an escrow account held by the Rhode Island Department of Labor and Training with a current balance of $750,000,” wrote Smith in his decision.
“I am very happy that the Court provided this preliminary approval,” said St. Joseph pension fund receiver Del Sesto.
“The preliminary approvals of this settlement and the Charter Care Foundation settlement are significant first steps to, hopefully, put substantial funds into the Plan so the pension holders can be better protected and they and their families can continue to rely on the benefits they worked so hard throughout their lives to earn,” said Del Sesto.
“We believe we will and look forward to obtaining final approval from the Court at the hearings scheduled for late August and early September,” he added.
Reaction
The Rhode Island Senate passed legislation that extends the Hospital Conversion Act.
The legislation is sponsored by Senate President Dominick Ruggerio.
“This legislation will help prevent what happened with the St. Joseph’s Health Services pension plan from ever happening again in Rhode Island. Extended monitoring will provide the necessary increased oversight, while stiffer penalties will work to ensure those who don’t comply with the law are held accountable,” said Ruggerio.
The bill has been sent to the House of Representatives for consideration.
The Bill
The legislation requires monitoring for hospital conversions involving non-profit purchasers, at the expense of the acquired, and extends the monitoring following a conversion from 3 to 5 years.
It also doubles penalties for failure to comply with the terms of the conversion from $1 million to $2 million.
“The passage of these amendments to the Hospital Conversion Act ensures that the Office of the Attorney General, as well as the Department of Health, have the legal and financial tools necessary to adequately monitor and enforce our conditions in future transactions. I would like to thank Senate President Ruggiero for his strong advocacy and members of the Senate for working with my office to pass this legislation, which gives us the necessary strategic enforcement tools to protect the interests of all Rhode Islanders,” said Attorney General Peter Neronha.
This bill comes after last year, when a law introduced by Ruggerio helped members of the insolvent pension plan to reach settlements in their multiple class-action lawsuits by better positioning members to reach fair, equitable settlements with the multiple defendants of the lawsuits.
Related Slideshow: 10 Shocking Elements of the St. Joseph Pension Fund Lawsuit Against the Diocese and Others
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