NY Attorney General Files Lawsuit to Recover Lost Retirement Benefits for Hospital Workers

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Neglect and mismanagement by the Roman Catholic Diocese of Albany has caused more than 1,100 former employees to lose their retirement benefits, according to the attorney general.

The New York Attorney General today filed a lawsuit to help more than 1,100 former employees of St. Clare’s Hospital in Schenectady, New York, recover pension benefits lost due to ‘negligent actions’ and Intentional” allegations of the Roman Catholic Diocese of Albany.

Attorney General Letitia James alleges the diocese has shied away from its fiduciary and legal responsibilities to nurses, lab technicians, social workers, paramedics, orderlies, housekeepers and other essential workers of the old hospital when he failed to preserve and protect the hospital pension which was entrusted to his care.

Of those 1,100+ who lost their pension benefits, 650 pensioners lost all their pension rights and almost 450 pensioners received a one-time payment equal to 70% of the value of their pension.

James is seeking to hold the diocese accountable for the misconduct and recover the pensions.

“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.

“No one should ever have to deal with the financial and emotional trauma of losing the resources they relied on to survive,” she said. “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 they get the retirement benefits they are owed.”

The diocese’s decision to remove the pension plan from protections available under federal law, its failures to adequately fund, monitor, or insure the pension, and its failure to administer the pension violates the Nonprofit Corporations Act. of New York and New York Estates, Powers & Trusts Law, according to a press release issued by James’ office.

St. Clare’s Hospital, co-founded by the diocese in 1948 and closed in 2008, was primarily run by the St. Clare’s Corporation, a non-profit corporation created by the diocese to oversee hospital operations.

The attorney general launched an investigation into the diocese in 2019 after ending the pension that had been in place since 1959. That investigation found “repeated and widespread violations of the diocese’s fiduciary duties of care, loyalty, ‘Obedience and Disclosure at St. Clare’s’. Corporation,” resulting in the non-payment of pension benefits promised to its vested former employees and retirees, according to the attorney general.

For example:

  • 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, the diocese made no annual pension contributions for all but two years from 2000 to 2019, resulting in the pension being underfunded by $43 million.
  • The diocese hid the collapse of the pension plan from the federal government and former hospital workers who were invested in the plan and rejected all attempts to make up the shortfall.
  • In 2007, the diocese requested and received $28.5 million in New York State Medicaid funds to eliminate the pension deficit. However, the diocese knew that the funds were not sufficient to fully fund the pension, although they said they were.
  • The diocese did not require annual audits and accounting of the finances and pension of St. Clare’s Corporation, as required by the statutes of St. Clare’s Corporation.

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 company, according to Jacques.

In the petition for dissolution, filed 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. Due to concerns over overdue benefits owed to the more than 1,100 retirees, James opposed the company’s petition and sought answers on why the pension had failed to deliver the promised and deserved benefits. and what happened to the $28.5 million in Medicaid funds received by St. Clare’s from New York State.

The lawsuit is an important step in restoring their pensions, a pensioner said.

“We fought to get our pension back to us for over three years,” said Mary Hartshorne, a retiree from St. Clare. “We have endured a pandemic and runaway inflation that have strained our already depleted resources. We had almost given up many times… We finally have light at the end of the tunnel.”

The Roman Catholic Diocese of Albany did not respond to a HealthLeaders request for comment.

Carol Davis is the Nursing Editor at HealthLeaders, an HCPro brand.


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