PROVIDENCE – Barbara A. O’Neil felt angry, heartbroken and duped last month when she heard the pension plan holding her retirement funds had filed for receivership in R.I. Superior Court.
O’Neil, a compliance manager and auditor at CharterCare Health Partners, has worked at Our Lady of Fatima Hospital for 41 years, and the hospital’s former parent, St. Joseph Health Services of Rhode Island Inc., had promised her a full pension at the age of 65.
Now, as she nears her 60th birthday in December, it’s unclear how much – if any – of her pension she’ll receive.
“There was a story I read in high school about a maid who had borrowed and lost a beautiful necklace from a woman she worked for. She spent the rest of her life working to repay the necklace. At the end of her life, she found out that the necklace was fake,” O’Neil said. “I thought I’d never work for a fake necklace. But guess what? I’ve worked for a fake necklace.”
The pension plan, known formally as the St. Joseph Health Services of Rhode Island Retirement Plan, covers 2,700 current and former employees of Fatima. The plan, now administered by a court-appointed attorney, was previously under the control of St. Joseph Health Services.
The company, however, sold its operating assets to a group led by Prospect Medical Holdings Inc. in 2014. However, some liabilities – including the pension plan – were not included in the deal.
The plan remains, but is hemorrhaging money because it no longer receives any operating revenue to offset the outflux of benefit costs.
Associate Justice Brian P. Stern called an emergency hearing on Friday to receive an update on the plan from Stephen Del Sesto, the court-appointed attorney. The Providence lawyer, who specializes in receivership cases, is now in control of the plan. He told the judge he’s decided benefits would continue to be paid out per usual until at least February.
In the meantime, Del Sesto and Max Wistow, who has been named special counsel to the case, will determine how best to proceed both financially and legally.
Court documents detail two financial options, including one to close the plan immediately and liquidate all assets. The strategy would result in the plan paying out lump sums to only a portion of the current beneficiaries. All others – including, most likely, O’Neill – might not see a dime.
The second option would be to slash benefits for all participants by 40 percent, which is clearly a front runner of the two options.
“[The board] believes that a uniform reduction of the 40 percent of pension benefits is likely the most reasonable approach to achieving an equitable resolution for all beneficiaries,” according to court documents.
Earlier this year, the pension plan’s funded ratio – a measure of assets to liabilities – totaled 75.4 percent, according to an actuarial report done by The Angell Pension Group Inc., based in East Providence.
The funding level is relatively high compared to some other pension plans throughout the state and country, but because there is no money coming in, the fiscal stability of the plan is quickly eroding.
The plan could also lose its long-standing affiliation with the Roman Catholic Church, exempting it from making minimum contributions and paying for pension-related insurance.
Del Sesto is responsible for ferreting out all the financial details related to the case. He will meet again with the court on Oct. 11, and most likely present an updated plan in February.
Wistow, who was named special counsel on Friday, is responsible in conjunction with Del Sesto for identifying whether there are any legal claims that could be pursued related to the case, as there’s a lot of finger pointing and deflection about who knew what, when.
R.I. Senate President Dominick J. Ruggerio, who represents North Providence, where Fatima is located, lauded Wistow and his reputation. A prominent Providence lawyer, Wistow represented the state’s interest during the civil suits brought against many involved in the failed $75 million investment into the now-defunct video game company 38 Studios LLC.
“Mr. Wistow has a tremendous reputation as one of the finest legal minds in the state,” Ruggerio said. “The appointment of Mr. Wistow means that the beneficiaries can be assured that every aspect of the sudden deterioration of the pension fund will be thoroughly examined, and every avenue for remedy under the law will be brought to bear.”
Del Sesto told Judge Stern he would establish systems of communications with the public, and hold a town hall-style meeting in the near future. Stern, who is overseeing the receivership proceedings, approved.
“The court is fully aware that more than 2,700 participants in the pension plan are extremely concerned and upset based on the [receivership],” Stern said. “The more information we can get out there [the better].”
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.
