Pierce Atwood partner Stephen Del Sesto serves as court-appointed receiver for the St. Joseph Health Services of Rhode Island Retirement Plan in the first case of its kind in the country to use state receivership to protect a failed private “church plan” pension fund.
In 2017, the St. Joseph Health Services of Rhode Island pension fund was declared insolvent, putting the retirement plans of nearly 2,700 current and former workers at risk. Pierce Atwood partner Stephen Del Sesto was appointed by the Rhode Island Superior Court to serve as the receiver for and administrator of the pension plan.
Throughout its history, the hospital operating company St. Joseph Health Services of Rhode Island (SJHSRI), which owned Fatima Hospital, Roger Williams Medical Center, and the former St. Joseph Hospital in Providence, had been affiliated with the Catholic Church, and therefore its pension plan qualified as a “church plan” exempt from the provisions of the Employment Retirement Income Security Act of 1974 (ERISA). In 2014, SJHSRI sold controlling ownership of Fatima Hospital and Roger Williams Medical Center to the for-profit, California-based Prospect CharterCare.
The retirement plan participants learned in August 2017 that the plan had not been adequately funded, when the plan was placed into receivership by SJHSRI, with the request that the Rhode Island Superior Court approve a virtually immediate 40% across-the-board reduction in benefits.
As receiver, Stephen filed a lawsuit filed on behalf of the plan and its participants. The lawsuit alleged that, after the plan no longer qualified as a ‘church plan,’ it failed to be funded according to ERISA standards, and entities administering or associated with the plan hid this to keep from adhering to ERISA funding rules.
In January 2021, the parties reached a settlement agreement, under which $30 million will be paid to the plan by the hospital’s parent company, Prospect CharterCare, and other defendants.