Former St. Clare’s workers sue
Lawsuit blames collapse of pension fund on Diocese of Albany, which oversaw plan
Former St. Clare’s Hospital workers have turned their anger over the loss of their pension benefits toward the Roman Catholic Diocese of Albany, which purchased the land where the hospital was built in the 1940s.
With help from the Legal Aid Society of Northeastern New York, the AARP Foundation and others, about 100 St. Clare’s pensioners filed a lawsuit on Tuesday against the diocese and the board that oversaw the pension plan, which was terminated last November in the face of a $35.5 million shortfall.
The lawsuit puts the blame for the collapse of the pension plan — which led to the reduction of payments to the oldest retirees and the elimination of all benefits for others — upon the Catholic Church, which until now has distanced itself from the crisis. Bishop Edward Scharfenberger sits on the board that oversaw the pension’s operations and was allowed to appoint four other board members, giving the diocese the power over “all major decisions” impacting the pension plan, the suit states.
“Of course we hoped the diocese would step up in the end and keep the promises it made to these people,” Legal Aid Society attorney Victoria Esposito said after filing the suit Tuesday morning in state Supreme Court in Schenectady. Esposito held a news conference with dozens of former St. Clare’s workers who are named as plaintiffs in the case. “I think all of us thought they would do that. And here we are.”
Among the dozens of former St. Clare’s workers was Mary Hartshorne, the lead plaintiff in the case. Hartshorne is also the co-chair of a committee that was organized after the pension crisis began in late 2018.
“If everybody thought we were going
to lay back and take it, we’re not,” Hartshorne said.
Albany Diocese spokeswoman Mary Deturris Poust said Tuesday afternoon that the diocese would not comment directly on the lawsuit because its lawyers have not yet seen a copy of it.
“However, we respect the rights of pensioners to do what they feel is necessary to secure recovery of their lost benefits,” Poust said. “Bishop Scharfenberger, as a board member, wants to do whatever he can to assist that effort. As we’ve said previously, the Diocese of Albany never managed the St. Clare’s pension fund. St. Clare’s is a separate corporation. Its pension was managed by the corporation, not by the diocese.”
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bishop Scharfenberger, in his role as a board member, continues to seek out possible funding sources to assist pensioners. he has met with them, heard their stories and knows they are suffering.” Mary Deturris Poust, Albany Diocese spokeswoman
St. Clare’s Hospital was merged into Ellis Hospital a decade ago as part of a statewide consolidation of hospitals. The hospital pension plan survived, albeit with a $28.5 million contribution from the state to help ensure its solvency, and was overseen by an entity called St. Clare’s Corp. Scharfenberger sits on the St. Clare’s Corp. board, which has historically held its meetings at the diocese offices in Albany.
However Tuesday’s lawsuit claims that as part of its grant application to the state to help it merge with Ellis, St. Clare’s had requested $47 million to keep its pension plan solvent, nearly $20 million more than the state Department of Health had paid.
State Sen. Jim Tedisco showed up at Tuesday’s news conference and told the crowd that he has tried in vain so far to get a copy of the grant application that St. Clare’s Hospital filed with the state, which outlined how much aid it needed to keep its pension whole if it ceased operations under the merger.
Tedisco says he filed Freedom of Information Law requests in May with multiple state agencies for the grant documents but had been told they cannot complete the request until November at the earliest.
“They do not want to give me these documents,” Tedisco said. “I believe that there are some documents that do not say anything about an agreement of $28 million being enough money to cover the pension fund,” he said. “I believe there is documentation for that.”
The pension fund covers roughly 1,100 beneficiaries, all of whom were told last fall that they would either be losing their retirement benefits or getting reduced benefits after the fund collapsed under the weight of a $35.5 million shortfall.
Poust said Scharfenberger understands the plight of the St. Clare’s pensioners and has worked to make the fund more transparent and try to find a solution to the shortfall.
“After accepting the invitation to join the board of St. Clare’s Corp. in 2015, Bishop Scharfenberger became concerned that pensioners might not be fully aware of actuarial reports that showed where the pension plan was headed,” Poust said. “He urged the board to make that situation clearer to pensioners, and the board agreed. Letters were sent out shortly thereafter. Scharfenberger, in his role as a board member, continues to seek out possible funding sources to assist pensioners. He has met with them, heard their stories and knows they are suffering.”
Earlier this year St. Clare’s Corp. filed paperwork in state Supreme Court in Schenectady to dissolve itself since its only function was to oversee the pension. The action by the St. Clare’s board has been challenged by the state attorney general’s office as well as the Legal Aid Society, whose lawyers have taken up the case of the pensioners.
The latest filings in that case, which was initiated in March, indicate that the St. Clare’s board voted in late 2017 to seek help from the federal government to save the pension plan from collapse.
However, the plan never materialized, perhaps due in part to fears of legal action by the U.S. Department of Labor.
In the 1990s, the hospital got permission from the Internal Revenue Service to drop federal pension insurance coverage through the Pension Benefit Guaranty Corp., a move that led to a settlement with
the PBGC that resulted in the hospital getting an $88,000 refund of its premiums paid over the years up until then.
Tuesday’s lawsuit alleges that the Catholic Diocese of Albany was a signatory to that settlement with the PBGC in 1995, a move that left the pension fund without a safety net.
In its case to try and dissolve itself, the pension fund board said it paid out $25 million in benefits since 2008. And when the board decided to terminate
the pension plan last year, the pension fund purchased $29 million in annuities to ensure that the remaining funds would be paid out to at least the oldest of the retirees. That money is being used to pay the pensions for employees who are now receiving smaller monthly retirement payments that are 70 percent of what they were promised when they were working at the hospital.
One of those former employees is Laurie Wasniski, who worked in the medical library at St. Clare’s for 30 years before moving to Ellis after the merger. She retired in 2016 but says with her monthly pension
checks reduced by 30 percent, she has to watch every dollar she spends. She declined to reveal her monthly payment, which she said is substantially more than her Social Security benefit.
“I don’t buy clothes or groceries the way I used to,” Wasniski said. “Vacations aren’t really there, just cutting back on living. I wait for that check to come in because I don’t have anything to back me up. To have this taken away, not just for me, but for all of these people, it’s shouldn’t have been. We were promised something, and now it’s been taken away from us.”