Attorney General Letitia James at her office in New York City. Photo: Ryland West/ALM
The New York State Supreme Court heard oral arguments last week, as former St. Clare’s Hospital workers who have been attempting for years to recover their pensions, after the church-affiliated hospital closed 17 years ago. Plenty of lawsuits followed, as 135 of the 1,100 pensioners died waiting to receive their shares of the pension.
The pensioners were hopeful that the hearing would clear the way for a trial, allowing them to be part of the diocese’s bankruptcy proceedings.
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Even after St. Clare’s closed in 2008 and the state awarded $28.5 million as a pension fund bailout, officials continued to mismanage the retirement plan and mislead pensioners, alleged AARP Foundation, New York State Attorney General Letitia James and the Albany Roman Catholic Diocese, in their lawsuit.
In 2018, the former hospital workers learned their pensions would be sharply reduced or eliminated because the fund was wiped out by a $50 million shortfall that was attributed to the 2008 recession. The pension's board voted in 2018 to close the fund, a decision that resulted in nearly 700 of the younger pensioners in the plan having their benefits wiped out entirely AND 440 of the older pensioners were told they would get just 70% of their benefits, according to a lawsuit filed in 2019.
After the state AG’s office launched an investigation in 2020 under pressure from state lawmakers, James joined the litigation three years ago.
The Albany Diocese declared bankruptcy in 2023 as it faced hundreds of lawsuits under the state’s Child Victims Act. AARP, which is co-representing the pensioners alongside the state AG, calls the hearing “a pivotal moment” in a legal battle that has spanned six years.
The lawsuit alleges that top officials with the Albany diocese had mismanaged the pension fund and falsely told the IRS that required annual contributions were being made to the pension plan, which was created in 1959, about a decade after the diocese co-founded the hospital.
Judge Vincent Versaci heard from lawyers representing the AARP, New York State Attorney General Tish James, and the Albany Roman Catholic Diocese.
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The judge said he was “about 90% done drafting the decisions in this case, so this oral argument today helped crystallize some of the issues for him, answered the questions that he had that were remaining, and he expected to issue the decision, he said, shortly …,” said Louis Lopez, vice president of litigation at AARP foundation. “We're hopeful that within the next week or two, we'll have a decision and then be able to request a status conference to schedule a trial for before a jury later this year."
It’s expected the outcome of the case could have implications for church-affiliated hospitals and their employees nationwide, as well as bankrupt companies.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
