Judge OKs $12M settlement in pension case

PROVIDENCE — A federal judge this week granted preliminary approval to a $12-million settlement for the troubled St. Joseph’s and Our Lady of Fatima Hospital pension plan and its 2,700 beneficiaries.

U.S. District Court Chief Judge William E. Smith on Thursday approved a settlement with three of the defendants in the case.

The settlement involves three entities that used to own Fatima Hospital, Roger Williams Medical Center and the now-closed St. Joseph’s. They are CharterCare Community Board, St. Joseph Health Services of Rhode Island and Roger Williams Hospital.

The cases continue against the other defendants, including the Roman Catholic Diocese of Providence and Prospect CharterCare, the California-based, for-profit company that now owns Roger Williams Medical Center and Fatima Hospital.

The settlement calls for a minimum $11.15-million upfront payment to help prop up the insolvent pension fund, plus $750,000 from the state Department of Labor and Training workers’ compensation escrow account.

The St. Joseph’s Health Service pension crisis came to light in August 2017, when the managers of the pension plan asked the court to put it in receivership, saying that it didn’t have enough assets to pay its 2,700-plus beneficiaries. They asked the court to approve a 40%, across-the-board benefit cut.

Superior Court Judge Brian Stern appointed Stephen Del Sesto as receiver, with Max Wistow as special counsel.

Del Sesto sued last year, objecting to the cuts and accusing Prospect CharterCare and also Roman Catholic Bishop Thomas Tobin of concealing financial problems within the pension fund to shield their own liability from regulators during Prospect’s acquisition of the company that owned Roger Williams Medical Center and Fatima Hospital and St. Joseph Health Center.

At the time, St. Joseph Health Services and Roger Williams Medical Center were set up as subsidiaries within a company that later became known as CharterCare Community Board.

During the acquisition, all of the operating assets of two subsidiaries were transferred to the newly formed Prospect “in exchange for a cash payment and a grant to CCCB of 15% interest in Prospect," court documents show.

Attorney General Peter F. Kilmartin's office and the state Department of Health approved the sale. The deal encompassed a $14-million payment into the troubled pension plan, but left it with no other revenue beyond that from investment returns.

The $95-million pension fund was declared insolvent three years after the sale to Prospect CharterCare.