‘Orphans’ of St. Joseph pension plan fear worst

‘Orphans’ of St. Joseph pension plan fear worst

John Flynn, of Lincoln, looks at a bill as he wonders what the future of his pension will be. (Breeze photos by Charles Lawrence)

NORTH PROVIDENCE – The 2,724 “orphans” of the St. Joseph Health Services of Rhode Island retirement plan say they feel abandoned, sad and angry.

“We were promised a pension, and a lot of people have retired with the understanding that the pension would be there for us,” said Caroll Short, a Smithfield resident and former radiographer at Our Lady of Fatima Hospital in North Providence. “This is disappointing and very, very sad.”

Members of the bankrupt pension plan will soon find out if their worst fears come true. For many, what happens next in this unfolding “nightmare” could represent their financial doomsday, as many members are making only a few hundred dollars a month.

For Short, 64, the entire situation with the pension plan represents “a whole lot of incompetence and a big disgrace.”

Suggestions are that pensioners are in line for a cut of 40 percent to their pensions.

A cut of 40 percent to her pension would hurt badly, said Short, but she feels worse for people like her mother, 88-year-old retiree Claire Sharpe, whose pension after 25 years of work is much smaller. Older retirees rely on monthly amounts as low as $300 to pay for their food and medication, said Short, and many of these most vulnerable citizens are facing questions about how they’ll make it if their pensions are cut.

Short was forced to retire after injuring her hand and paralyzing it. She doesn’t have the option to find a new job.

She says she doesn’t understand how Attorney General Peter Kilmartin or Bishop Thomas Tobin of the Roman Catholic Diocese of Providence didn’t do more to prevent this scenario and haven’t done more to help pensioners.

Receiver: No immediate changes to benefits

Stephen Del Sesto, the attorney named as the receiver for the pension plan, told The Breeze that the most important thing for pensioners like Short to know heading into a planned Oct. 11 Superior Court hearing is that the hearing won’t result in any changes to benefits, he said. Del Sesto said he asked that the court push back that issue until after Jan. 1.

“At this point, the October hearing will only address my appointment as permanent receiver,” he said by email. “I may bring some other administrative issues to the court’s attention, but nothing that will change benefits. I am looking at everything and every option to do my best to try to make sure that the 2700+ people impacted are protected as much as possible.”

Based on Del Sesto’s last report, there were 2,724 participants in the plan, 1,229 of those active retirees receiving benefits, including full retirees, disable-eligible employees and retirees who may still be working either for the hospital or elsewhere. There are approximately 498 pensioners who are active but not yet collecting (of an age to apply either through early or standard retirement age). There are 997 members who are vested in the plan but inactive, meaning they’re not yet eligible to receive payouts.

Diocese: “Deeply disappointed,” but we have no involvement

Karen Davis, spokeswoman for the Diocese of Providence, issued the following statement:

“It is completely understandable that some folks are concerned about the pension situation. We are deeply disappointed and concerned about the situation too,” she said. “It’s important for people to understand, though, that the Diocese hasn’t been involved in any aspect of the administration or management of the hospital or the pension funds for several years. It has been reported that as recently as three years ago, the fund was more than 90 percent funded. We hope that this situation can come to a positive resolution in the very near future.”

A representative for Kilmartin did not respond to a request for comment.

Senate President Dominick Ruggerio has called for an investigation into how the pension fund serving staffers at Fatima Hospital and the former St. Joseph Hospital in North Providence fell from 90 percent funded three years ago into receivership so quickly.

Ruggerio, of Senate District 4, Providence and North Providence, has submitted legislation to encourage court settlements in the event that claims are made as part of the pension fund bankruptcy case. Ruggerio said he’s pursuing “all potential remedies” to assist beneficiaries.

Plan is in a precarious position

First set up in 1965 by the Roman Catholic Diocese of Providence, the St. Joseph retirement plan was orphaned in 2014 when CharterCARE Health Partners joined with Prospect Medical Holdings. The retirement plan became an orphaned liability, with no significant revenues going into it. Prospect made a one-time contribution of $14 million into the plan, bringing it to 90 percent funded.

Over the past year, the plan has paid out $10 million, bringing its market value down from $98.5 million to $86.8 million. The plan is now funded at about 75 percent, a higher number than many other plans, but not when considering there is no money going into it.

Union representatives and others have questioned how the plan has fared so poorly since 2014, even as the stock market has continued to boom. About $43 million is needed to fully fund the plan, according to an actuarial report.

Like the Diocese, CharterCARE is saying the company has nothing to do with the pension plan and directing questions to Del Sesto as the receiver.

“It is important to note that the pension fund is not connected to either CharterCARE Health Partners or Prospect,” said CharterCARE CEO John Holiver in an email to employees last month. “The Pension was 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.”

Pensioners grateful to Violet, but scared

John Flynn, a Lincoln resident and former Town Council member who retired from the hospital 14 years ago, said he and other non-union pensioners are grateful that Arlene Violet, former Rhode Island attorney general and Breeze columnist, has agreed to represent their interests. He said retirees are anticipating pursuing a class-action lawsuit, but many questions need to be answered before that can happen.

According to Flynn, the St. Joseph pension represents about half of his income. If he receives a significant cut, he plans to spend less money and start withdrawing from his retirement account faster than he’d anticipated.

There is no cost of living increase built into the pensions, said Flynn, former chief operating officer at the hospital and a 35-year employee, meaning he’s been receiving the same amount for 14 years.

Violet: I’m here to protect the little old ladies

Violet this week said the whole situation for retirees is “awful.” Special counsel Max Wistow’s role is to determine whether he should advise Del Sesto to pursue legal action against the third parties involved, said Violet. Her job, with co-counsel, is to try to “block any haircut” to retirees, she said. Under the assumption that 100 percent of funds are recouped from third parties, “we will argue that not everyone should get the same haircut of 40 percent,” she said.

With an average monthly payout of $425, there are a considerable number of people under that number, said Violet. Drastic cuts are more harmful to the “little old lady” nurses of the plan than to current workers or later retirees.

“For people who have the least amount of pensions out of all this, they shouldn’t have anything cut,” she said.

Attorneys will eventually ask the receiver and/or the court not to cut any of those older retirees’ pensions, said Violet.

The argument is essentially to bring “intergenerational recognition,” she added, or an acknowledgment that the union was formed “on the backs of these old ladies.” Unlike union nurses of today, these women are unemployable and have no ability to get a second job or negotiate future contracts, she said.

Violet is asking the receiver to do a “deep dive into the pension” plan to determine the number of people who are only getting a “nominal” monthly payout. According to Del Sesto, about $850,000 is being paid out monthly in pensions. Violet’s suspicion is that the older pensioners, “the old ladies, custodians, housekeeping” workers and others, would total less than half that amount.

Retirees: Nothing in return for their investment

Retiree Marilyn Horan, of Providence, who initially reached out to her former classmate Violet for help, said she retired in 2004 and then went to work at the Veterans Affairs Hospital. It’s been three years since she retired from the VA at the age of 70.

The former full-time nurse said she’s not handling the news of the pension collapse well, after being born in Fatima hospital, receiving her education there, and later working as a staff nurse and educator.

“If that’s cut, I’m dead in the water,” she said.

The St. Joseph pension is her largest chunk of income, said the former assistant director of the School of Nursing. It would hurt her ability to pay her taxes and utilities.

“I have the greatest amount of confidence in Arlene,” she said. Many people would be hurt with a 40-percent cut, she said, particularly families where husbands and wives are both part of the pension system.

“They were both depending on that pension, which isn’t very much to begin with,” she said.

Being in management, Horan said, she worked through everything, including blizzards, hurricanes and labor strikes.

“For what?” she asked.

Barbara O’Neil, a Smithfield resident for 55 years who will turn 60 on Dec. 2, said she feels “completely betrayed” by everyone involved in the pension plan after working 41 years for Fatima Hospital.

O’Neil, who started out as a medical records file clerk and is now corporate compliance manager and auditor for CharterCARE, said she was already let down once, when St. Joseph Hospital merged with Roger Williams Medical Center in 2009 and pensions were frozen, making her ineligible for early retirement.

O’Neil said she and other pensioners received annual letters reassuring them that while they were receiving less pay, they had an asset in the pension plan. That asset is now gone.

She has now applied for her monthly benefit while she’s still working. Though she’ll be taxed on it, she wants to be able to get anything she can from the system.

O’Neil said she had been planning to take an early retirement at 62 or 63 years old, but now has no plans to retire at all.

The pensioner said there are many moral and ethical questions that should be answered in the coming months, especially from the Diocese.

“The Bishop orphaned his flock,” she said.

Retirees Claire Sharpe, left, of Johnston, and her daughter Caroll Short, of Smithfield, pictured at Short’s Smithfield home, are two of 2,700 people facing potentially severe cuts to their questions through the St. Joseph Health Services of Rhode Island retirement plan.
Retiree Marilyn Horan says she and others would struggle to pay their bills if they take a 40-percent hit to their pensions.

Comments

This was a bigger scam than the 1973 movie "The Sting".The diocese washed their hands of responsibility to thousands once again,along with hospital board members and politicians.Practice what you preach

Let see whats happens to Pawtucket Memorial Hospital. Is Kilmartin going to look in to this?

Thank you to the Valley Breeze for covering this important issue and allowing me to contribute to this story. I must comment that I strongly disagree with Arlene Violet's position that "The argument is essentially to bring “intergenerational recognition,” she added, or an acknowledgment that the union was formed “on the backs of these old ladies.” Unlike union nurses of today, these women are unemployable and have no ability to get a second job or negotiate future contracts, she said." I have never been a nurse or worked for the union and have worked my entire career (41+ years) for this organization and earned every penny of my pension benefit, as did "these old ladies". I have worked for more than 41 years and relied on this pension as well as everyone else. No group of pensioners deserves more than any other. While it is "right" for Arlene Violet to stand-up for pensioners on this issue, it is 100% wrong to divide the pensioners into groups and assume one group deserves more than another. May I add that these "old ladies" have collected 100% more than I have from my earned pension benefit. I have collected 0% to date.

I was mistaken when I said Arlene Violet was representing us.
She has no official standing with this receivership. Attorney Del Sesto has been appointed Temporary Receiver to represent everyone in the group.

I was pleased with your article on our behalf however I was disappointed that all the victims I mentioned "self supporters, widows,elderly" were not mentioned as I support EVERYONE. Otherwise, thank you for a great article.

The Catholic Church took the dignity of the children and now the lives of their parents and grandparents.

Thank you for printing this story. It is important that everyone in Rhode Island understand that the Providence Diocese of the Catholic Church did not appropriately maintain the pension fund that was promised to all st. Joseph hosp employees. The diocese stopped or underfunded the plan and all employees are not facing a large reduction in the pension that they were guaranteed over 50 years ago.
The church claims they have no responsibility but the bishop was president of the board for st joe's and the officers that maintained the pension were appointed by the bishop. Now they just want to let the loyal employees (some for up to 50 years) get a drastic cut in their pension because the church isn't willing to fund take responsibility for their errors.

As a retiree of St. Joe's, I am already beginning to tighten my budget. We "old ladies" were so committed to our jobs that we switched shifts, days on and off, vacation times and other situations so we would not be short staffed. I personally walked to work during the blizzard of '78 while other nurses walked, got on buses or were brought in by helicopter. We poured our lives into our jobs: some 10,20,30 plus years. We feel like orphans: a person(s) or thing that is without protective affiliation, sponsorship, etc.
But we are joining together as we did when we worked together in the cause for human justice and to keep our pensions.
Marie E. Martin