Will Kilmartin Be Sued for Role in St. Joseph’s Pension Fund Bankruptcy?

Monday, September 11, 2017


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Peter Kilmartin (L) and former State Police Col. O'Donnell

Get ready for the legal fireworks to begin in the effort to recover funds for retirees of the bankrupt St. Joseph Health Services pension fund. As reported Friday afternoon, receiver Stephan Del Sesto received court approval to tap famed 38 Studios lawyer Max Wistow. 

Wistow, known as a tenacious litigator, successfully recovered more than $60 million for the state of Rhode Island in the 38 Studios lawsuits.

Wistow refused to comment on the focus of his efforts on Friday, saying he has only just been appointed, but potentially Del Sesto and Wistow could zero-in on the different healthcare companies who flipped St. Joseph first from being owned by the Diocese of Providence to the then-Roger Williams Medical Center, and then from Roger Williams to CharterCARE.

Attorney General Peter Kilmartin has a key role under Rhode Island’s Hospital Conversion Act and the 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.” 

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Keith Stokes, former head of the then-EDC

Wistow Has Sued Key State Officials Previously

In November of 2012, Wistow filed lawsuits against 14 different individuals and corporations to recover funds from the entities tied to the $75 million given in a guaranteed loan to Curt Schilling’s failed 38 Studios. Not only were Schilling, law firms, and financial consultants sued, but so were two top Rhode Island Economic Development Corporation (EDC) officials. 

Keith Stokes, the head of EDC and his number two, Michael Saul were sued individually by Wistow at the direction of the Board of EDC. Stokes was no back bencher. He had been a top aide to Governor Bruce Sundlun, then headed the Newport County Chamber of Commerce before being named to head EDC by then-Governor Donald Carcieri.

At the time, Governor Lincoln Chafee said the EDC Board of Directors had voted unanimously to take legal action. “When it became clear that the company would not survive, I publicly stated my commitment to you that my primary goal would be to do everything within my power to protect the taxpayers of Rhode Island," said Chafee. 

“My message to Rhode Islanders is this: I know that you work hard for your paychecks, and for your tax dollars to be squandered is unacceptable. The Board’s legal action was taken to rectify a grave injustice put upon the people of Rhode Island,” said Chafee.

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Receiver Stephan Del Sesto

Court Authorized Subpoena Powers

Subpoenas could be coming in the next few weeks. Judge Stern provided Del Sesto and, therefore, Wistow will subpoena powers. This will expedite the investigation and the effort to recover funds. Presently, the retirees are facing a 40 percent cut to their benefits. The nearly 3,000 in the group have been assured to receive standard -- non-reduced pension payment through February 1, 2018. 


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