New York AG sues Roman Catholic Diocese over hospital retiree pensions

Photo: Dean Mitchell/Getty Images

The New York Attorney General has complaint lodged against the Roman Catholic Diocese of Albany, claiming that it mismanaged the pensions of retirees at St. Clare’s Hospital, thereby evading its financial and legal responsibilities.

In the lawsuit, Attorney General Letitia James claimed the diocese failed to properly administer the pension, resulting in the complete loss of pension benefits for around 650 retirees. An additional 450 pensioners would have received a single payment, equal to 70% of the value of their pension.

While the hospital itself closed in 2008, a related company, St. Clare’s Corp., remained intact and was tasked with managing and maintaining the pension fund. The company established the pension in 1959.

The diocese’s decision to remove the pension plan from protections available under federal law—along with its alleged failures to adequately fund, monitor, or insure the pension—violated New York’s Nonprofit Corporations Act. York and New York Estates, Powers & Trusts Law, James said in a Press release.

James is seeking to hold the diocese accountable for the misconduct and recover pensions that former hospital workers lost.

“These former hospital workers nobly served their community and cared for the sick, the elderly and the vulnerable. But when they retired, they were left with nothing,” James said in a statement. “No one should ever have to deal with the financial and emotional trauma of losing the resources they relied on to survive. With this action, we are standing up for New Yorkers who deserve to retire with dignity, and I will do everything in my power to ensure that they get the retirement benefits that are due to them.”

St. Clare’s Hospital was co-founded by the diocese in 1948.

WHAT IS THE IMPACT

The allegation is that in 1992, the diocese used its religious status to obtain a federal exemption to avoid required federal protections for retirees, such as pension insurance and minimum fundraising contributions.

After obtaining the exemption, according to James, the diocese breached its fiduciary obligations under New York law by failing to make annual pension contributions in all but two years from 2000 to 2019 – resulting in an underpayment. funding the $43 million pension – and hiding the collapse of the pension plan from the federal government and former hospital workers who were vested in the plan.

According to James, diocesan leaders have rejected all attempts to make up the shortfall, including the request for pension insurance to protect pensioners’ benefits; make no effort to combine the St. Clare pension plan with other diocesan pension plans; and by not allowing the diocese to provide direct pension financial assistance.

In 2007, the diocese requested $28.5 million in Medicaid funds from New York State to eliminate the pension deficit, which the state provided. But according to the AG’s investigation, the diocese knew there weren’t enough funds to fully fund the pension, despite saying they were. St. Clare’s Corporation management knew the pension would continue to be underfunded even with the state grant, but they never sought additional funds to fully fund the pension, James said.

In 2018, St. Clare’s Corporation management learned that their liability insurance coverage for directors and officers would not be extended, so to avoid exposing themselves to the risk of personal liability, they voted to unanimity to end the pension and dissolve the society, depending on the suit.

In the petition for dissolution, filed with the court in 2019, the company admitted that it owed more than $50 million to the pension plan and its participants and that it had no way or intention to fully fund the pension. New York law requires the Office of the Attorney General to approve voluntary dissolutions of New York nonprofit corporations.

GENERAL TREND: REACTION

The Roman Catholic Diocese of Albany responded to the lawsuit, saying that while it was sympathetic to St. Clare retirees, it disagreed with the attorney general’s decision to take legal action.

“We have been in litigation (for) more than two years with the Attorney General and the other parties,” the diocese said. written in a statement. There are two ongoing lawsuits involving St. Clare in court and there have been multiple depositions with substantial and comprehensive discovery regarding what has been alleged.

“This lawsuit seeks to replicate the same claims and allegations that are in the lawsuits currently pending before the court. Today’s announcement does not raise any new issues. It will only prolong the proceedings, which will delay still resolving the case.”

Twitter: @JELagasse
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