Tedisco: AG looking at St. Clare’s pension crisis

AG's office objects to dissolution of St. Clare's Corporation
The former St. Clare's Hospital in Schenectady is pictured.
The former St. Clare's Hospital in Schenectady is pictured.

Categories: Business, News, Schenectady County

SCHENECTADY — The state Attorney General’s Office apparently is taking a closer look at how the St. Clare’s Hospital pension fund wound up in crisis.

The agency has filed a series of legal objections to the attempted dissolution of the St. Clare’s Corporation, the former steward of the pension fund and the last corporate remnant of the Schenectady hospital that ceased operation in 2008.

State Sen. James Tedisco, R-Glenville, whose district includes the former hospital and whose constituents include many of its former employees, said Tuesday the moves seem to indicate a new stance. Previously, he said, the three statewide elected officials — governor, comptroller and attorney general — had declined to get involved in the matter.

Now, he said, Attorney General Letitia James’ staff has told him that they’ll dispatch forensic accountants to delve into the matter, if approved by the court hearing the corporation’s request for dissolution.

“It validates the fact that it was important to get an investigation and we’re buoyed by the fact that they are delving deeper, a lot deeper,” Tedisco said. “Some of the things that happened can be described, generously, as misconduct.”

The Attorney General’s Office typically does not discuss investigations. It did not return a request for comment for this story.

More than 1,100 former employees of St. Clare’s saw their pensions reduced or eliminated in recent months due to a pension fund shortfall now estimated at $53.5 million. The financially troubled hospital many years ago opted out of a federal pension insurance fund as a cost-saving measure, using an exemption available to church-affiliated hospitals.

So the pensioners have no safety net, but some have been fighting for other recourse. So far they have been unsuccessful, but they also haven’t given up. Tedisco and Assemblyman Angelo Santabarbara, D-Rotterdam, have introduced legislation to block dissolution of the corporation while efforts are still being made to restore the pension payments.

Tedisco said Tuesday he’s gained support from majority Democrats that will be critical to advancing the proposal in the Senate.

“The bill we have, myself and Assemblyman Santabarbara, is important as a backstop,” he said.

“I think we have to have a backstop to make sure that the investigation by the attorney general is not cut short. I think getting to the bottom of this — how it originated, the back drop of how it started, in between the mistakes that were made, whose responsibility it was — we can craft a plan to make pensioners somewhat whole.”

Court papers submitted by the Attorney General’s Office outline the objections:

  • The petition for dissolution submitted in state Supreme Court, Schenectady County, is insufficient;
  • The corporation provided no accounting for the $28.5 million pension fund bailout provided by the state at the time of closure;
  • The corporation never filed annual reports with the Attorney General’s Charities Bureau as required by law;
  • The corporation didn’t provide audited annual reports to the court or Attorney General’s Office;
  • The corporation has failed/refused to provide requested financial documentation about itself or the pension plan;
  • The $28.5 million pension bailout a decade ago creates a substantial public interest now, in light of the pension crisis.

Also, the attorney general’s court filing asserts that each of the affected pensioners is a creditor and should be allowed six months to file claims before dissolution is considered.

But the underlying problem remains: The corporation has zero assets and there is no way for it to gain any assets, as St. Clare’s was long ago absorbed into what is now Ellis Medicine, which has no financial connection to the pension fund. One of the reasons for blocking dissolution of the corporation is the belief that it could more easily distribute money to pensioners than an unfamiliar organization, should a source of a bailout be secured.

Bob Bradley and Mary Hartshorne, who are leading a campaign to regain the pension payments, said they were heartened by Tedisco’s update.

“To know we have that level of support is amazing,” Hartshorne said.

“The St. Clare’s Corporation should not be allowed to simply walk away from this disaster,” Bradley said via email. “I applaud Senator Tedisco’s continued efforts on behalf of these pensioners.”

On another front, Hartshorne said she’s seeing great responsiveness from Bishop Edward Scharfenberger, head of the Roman Catholic Diocese of Albany, which many pensioners feel should help solve the pension crisis, given the diocese’s long, close association with the hospital and its administration. The diocese maintains it did not cause the crisis and isn’t responsible for fixing it or funding a solution.

But Scharfenberger lately has been very supportive of the effort to find a solution, Hartshorne said. He met privately with her and Bradley earlier this month and will meet with them again next week, she said.

“Honestly, I think he wants to make it work,” she said.

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