Del Sesto negotiating to avoid suit curbing St. Joseph settlement

ATTORNEY STEPHEN DEL SESTO is the court-appointed receiver for the St. Joseph Health Services pension plan. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – Stephen Del Sesto, court-appointed receiver for the collapsed $85 million St. Joseph Health Services pension plan, has until Feb. 1 to dissuade Prospect CharterCARE and affiliates from suing CharterCARE Community Board to prevent it from transferring a 15 percent ownership stake in Fatima Hospital and Roger Williams Medical Center to the fund as part of a settlement agreement.

The settlement agreement was reached Nov. 21 with three parties: The former St. Joseph’s Hospital, the former Roger Williams Hospital and the CharterCARE Community Board, Del Sesto said. It includes about $12 million in cash and the ownership stake.

Prospect CharterCARE, Prospect Medical Holdings and Prospect East Holdings Inc. collectively asked R.I. Superior Court Judge Brian Stern for permission to sue CharterCARE Community Board to block the ownership transfer on Oct. 27, according to court documents. There is an injunction preventing suits against the receivership, which is routine with receiverships, Del Sesto said.

Should the suit be approved and successful, it would not affect the cash portion of the settlement agreement, Del Sesto said.

- Advertisement -

Rather than risk a suit against the receivership, Del Sesto said, he has brokered a “stand-still agreement,” in which the parties will meet to work out the matter outside of the court.

The settlement now waits for federal approval.

Del Sesto said the ownership stake was worth about $16 million in 2016, though it could either be less or more by now. During the negotiation on the settlement, he said, representatives of CharterCARE Community Board, who own the stake, did not know the current value of the ownership stake, and had asked the Prospect affiliates for the information.

“I believe it is a significant asset, in terms of its value,” Del Sesto said.

During talks between the parties over the next two weeks, Del Sesto said, he hopes to learn the value of the ownership stake, to guide his next steps.

“It makes it difficult to assess whether a fight is actually worth it” without that information, Del Sesto said.

Del Sesto said it’s not unusual for him not to know the full value of the ownership stake at this point in the process. He said one detail that may be giving Prospect pause is that the affiliates would be responsible for paying the value of the ownership stake if he should choose to liquidate it.

The federal review of the settlement continues independent of the affiliates’ request to file the suit. If the settlement is approved, the cash portion would be transferred to the pension fund immediately, Del Sesto said. He would then need to make a decision about whether to keep the ownership stake or liquidate it, he said.

Del Sesto reached a second settlement agreement with the CharterCARE Foundation on Dec. 14 for $4.5 million, which has also been approved in R.I. Superior Court but needs federal court approval.

Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.

No posts to display