Dissolution of St. Clare’s Corp. delayed for review

No news is good news for pensioners crowding courtroom
People attend a hearing in at Schenectady County Courthouse regarding dissolution of St. Clare's Corp. on Tuesday.
People attend a hearing in at Schenectady County Courthouse regarding dissolution of St. Clare's Corp. on Tuesday.

SCHENECTADY — Ex-employees of the defunct St. Clare’s Hospital got a glimpse Tuesday into the legal mechanism through which the last remnants of their former employer are disappearing. 

But it was only a glimpse, and it contained none of what they’ve been waiting to hear: that there’s some hope of restoring the pension benefits for 1,100 retirees whose monthly check has shrunk or disappeared.

About 30 pensioners filled the spectator seats of the courtroom for a brief hearing in the proposed dissolution of the St. Clare’s Corporation, the legacy entity of the financially troubled Schenectady hospital that state regulators shut down in 2008.

After a significant delay as the parties conferred behind closed doors, attorneys for the corporation and the state Attorney General’s Office entered the courtroom, followed moments later by Judge Vincent Versaci. They went through the routine procedural matters, the Attorney General’s Office requested more documentation and more time to review it, the other attorneys agreed and Versaci approved, then adjourned the matter.

The only discussion of the pension was that the deficit is estimated at $53.5 million and that the corporation’s assets are exactly zero.

As they filed out of the courtroom, a couple of the male pensioners — most of whom are old enough to have been subject to the draft in their youth — remarked that the hearing was like being back in the military, a long wait for an announcement that said nothing.

The pensioners were left to discuss the matter among themselves and with journalists while a court officer gently shooed the throng away from the door to the court clerk’s office, which they’d effectively blocked.

The presence of the Attorney General’s Office did not signify the long-awaited investigation so many pensioners have sought into the decisions and actions that led to the pension crisis — instead, it is performing a routine review of the dissolution of a non-profit entity, one of the duties of that agency. 

But that is a good thing, said Victoria Esposito, an attorney with the Legal Aid Society of Northeastern New York who is representing two retirees, Kelvin Isolda and Laurie Wasniski.

“What I’m particularly pleased about is that we have the time for the AG’s office to get some documents, to be able to file objections and to be able to dig into the petitions a little more,” she said. “I guess that after today’s proceeding I’m cautiously optimistic, I’m very pleased it wasn’t a rubber stamp, I’m very pleased the AG’s office is involved. This is where we move forward from.”

A second attorney, David Pentkowski, has joined the matter on behalf of a third pensioner, Karen Bradley of Clifton Park. She is only an interested party at this point, not a plaintiff taking action. Esposito, by contrast, is working to recover benefits for Isolda and Wasniski.

Bradley, formerly a registered nurse at St. Clare’s, now works for Ellis Medicine, which absorbed the facilities and some of the employees but none of the pension liabilities of the old St. Clare’s in 2008. She said she’s trying to keep the issue alive.

Her husband, Bob Bradley, never worked for St. Clare’s but has been working on the pensioners’ behalf because of his financial background and because his wife is affected.

He said he and the pensioners want to see the dissolution of the St. Clare’s Corporation blocked for two main reasons: 1) If a source of money for a pension fund bailout is secured, the corporation would be best-suited to get the money to the pensioners, and 2) keeping the corporation intact would better facilitate a forensic look back at what caused the pension crisis, if one is attempted. 

(The state Comptroller’s Office and Attorney General’s Office have both declined requests to do this made by state legislators, and the pensioners as a group do not have a lawyer who could undertake such an effort.)

Nonetheless, Bob Bradley said: “I’m pleased with [the hearing Tuesday] … I think it will give everyone time to make the requests for whatever information is pertinent to this. Any delay, anything that can help us out is fantastic.”

The St. Clare’s pension fund went into crisis because no money was paid into it in the decade after the hospital closed and very little was paid into it in the decade before it closed — even as retirees drew millions in benefits. 

The hospital long ago used an exemption for religious-affiliated organizations and opted out of the federal pension insurance program as a cost-saving move, leaving its employees no safety net in the event the pension fund went insolvent.

Since the matter came to a head, and pensioners were notified of the impact on them, three potential sources have been mentioned as a source of a pension bailout: Ellis Medicine, the state and the Roman Catholic Diocese of Albany. 

Ellis was specifically exempted from pension liability as a condition of absorbing St. Clare’s.

The state provided what was thought to be an adequate pension bailout — $28.5 million — in 2008 and refused in 2018 to pay any more, saying the diocese has a “moral responsibility” to fix the matter.

The diocese says it did not cause the pension crisis and is not obligated (nor can it afford) to fix it. The diocese maintains it did not own or operate the hospital, but only was affiliated with it.

This last assertion draws the most skepticism, because the diocese was so closely involved with the hospital for so long, from before it opened until after it closed. The diocese recruited a religious order to open the hospital in the 1940s and four members of clergy signed the court petition to dissolve the St. Clare’s Corporation — including Edward Scharfenberger and David LeFort, bishop and vicar general, respectively, of the diocese.

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