AG Kilmartin defends handling of Fatima Hospital deal as pension plan struggles

RI Attorney General Peter Kilmartin_323505

PROVIDENCE, R.I. (WPRI) – Attorney General Peter Kilmartin on Thursday defended his handling of a 2014 takeover deal involving Our Lady of Fatima Hospital now that its pension plan is in dire straits, insisting he had no authority or responsibility regarding the plan when he approved the deal three years ago.

The 52-year-old St. Joseph’s Health Services of Rhode Island Retirement Plan, named for Fatima’s former parent company, was placed in receivership last week and is considering benefit cuts of up to 40%.

The pension plan was left orphaned, with no source of future revenue, when it was left out of the 2014 deal that saw California-based Prospect Medical Holdings enter a joint venture with CharterCARE Health Partners, which controls Fatima and its sister facilities.

All hospital transactions in Rhode Island must be approved by the attorney general as well as the Department of Health, and Kilmartin is now under criticism for signing off on the Prospect deal that set up the pension plan for failure. The plan covers roughly 2,700 current and retired St. Joseph’s Health employees.

In a lengthy statement Thursday, Kilmartin said he wanted to respond to “troubling news and misinformation” circulating about the pension plan. He suggested the alternative to what he did would be to “make sweeping demands that are outside the scope of the statute” governing hospital deals, known as the Hospital Conversions Act.

The act “does not give the attorney general’s office the authority to oversee or manage private pension funds associated with the health care system,” Kilmartin said. But, he noted, his office was told “that the pension fund would receive an injection of $14 million, bringing the pension fund to 90% funded.”

However, as Eyewitness News reported Tuesday, that was apparently the last deposit any entity was required to make to the pension plan – meaning ever since then it has been drawing down its assets to pay benefits. Benefit payments totaled $10 million in the 12 months ended June 30, 2016, shrinking the plan’s assets from $98.5 million to $86.8 million that year. Newer figures are not available.

Kimartin said he was in the dark about the pension plan’s post-Prospect cash flow problems. “I am very concerned and have many questions as to how the pension fund could be insolvent just three years after being funded at 90 percent,” he said.

The attorney general went on to say his office “is not directly or indirectly involved with the management of the pension fund” but has “engaged with” lawyers involved in the case and “will be closely monitoring the legal process, and assessing where we have legal standing to intervene.” He urged those involved to “establish and maintain complete transparency,” and encouraged pensioners to contact Stephen DelSesto, the plan’s court-appointed receiver, with their questions.

“These retirees deserve to know how this happened and what is being done to protect their investment,” Kilmartin said.

Asked about Ruggerio’s request, a spokeswoman pointed back to Kilmartin’s earlier statement.

The next hearing in the case is Oct. 11.

Ted Nesi ( covers politics and the economy for He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook,

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