PROVIDENCE, R.I. (WPRI) – Senate President Dominick Ruggerio on Thursday asked the Rhode Island State Police and Attorney General Peter Kilmartin to investigate why the pension plan that covers current and former Our Lady of Fatima Hospital workers is facing insolvency.
Ruggerio, a Democrat whose North Providence district includes Fatima, made the request in a letter sent to State Police Col. Ann Assumpico and Kilmartin.
“I request your assistance in examining any irregularities, mismanagement or negligence that may have led to the fund being placed in receivership, and whether there was any criminality,” Ruggerio wrote.
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%. More than 2,700 current and former employees are in the plan.
The plan was effectively left orphaned, with no source of future revenue, when it was excluded from 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. Prospect said at the time it would make a final payment of $14 million into the pension fund that would bring its funding level to 90%.
“It is extremely troubling that the fund would fall into receivership so quickly, and during a period of economic growth and record financial markets,” Ruggerio wrote. “I am concerned that a seemingly healthy pension fund has failed so suddenly.”
In a lengthy statement issued shortly before Ruggerio delivered his letter, Kilmartin defended his decision to approve the 2014 CharterCARE-Prospect deal. He said he was “very concerned” by the pension receivership but insisted he had no authority or responsibility regarding the pension plan as part of the review process.
Kilmartin also said his office is “engaged with” lawyers involved in the pension receivership 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.”
Yet Stephen DelSesto, the pension plan’s court-appointed receiver, suggested its failure was likely inevitable once it was severed from a parent company with revenue to contribute.
“It seems to me, from everything that I’ve seen, that this was not a surprise,” DelSesto told Eyewitness News.
“Other than that $14 million, it’s my understanding – aside from return on the investment of the assets – there was no money that went in,” he said. “You had a hospital company that had no hospital to manage, so they didn’t have any money to put in.”
DelSesto argued that placing the pension plan in receivership was “a very thoughtful and deliberate step” that gives the St. Joseph’s retirees their best chance to receive as much as possible in benefits.
The United Nurses and Allied Professionals, a union that represents about 650 staffers at Fatima, was not satisfied with that explanation.
“Whether it was through malfeasance or mismanagement, someone hung these people out to dry, and we intend to do all that we can to see that our members and retirees are made whole,” Christopher Callaci, UNAP’s general counsel, said in a statement Thursday applauding Ruggerio’s request for an investigation.
The next hearing in the receivership case is scheduled for Oct. 11.Ted Nesi (email@example.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook