St. Clare’s pensioners file suit against hospital corporation, Albany diocese

PHOTOGRAPHER: Marc Schultz

Attorney Victoria Esposito speaks about her legal efforts on behalf of St. Clare's pensioners Tuesday in Schenectady.

SCHENECTADY — Dozens of former St. Clare’s Hospital employees filed suit Tuesday against the Roman Catholic Diocese of Albany and the St. Clare’s Corp. over the handling of their pension fund.

The lawsuit, filed in state Supreme Court in Schenectady County, is the latest turn in the nearly yearlong fight pensioners have waged since the St. Clare’s Corp. announced it would not pay out pensions as originally promised. A little more than 1,100 former St. Clare’s employees are affected by the problems plaguing the pension fund of the hospital, which merged out of existence in 2008.

“They aren’t looking for a handout,” said Legal Aid Society attorney Victoria Esposito, who joined with more than a dozen St. Clare’s pensioners to announce the lawsuit on the steps of the Schenectady County Courthouse. “They earned this pension, were promised this pension, and our absolute primary goal is to get them their pension.”

The lawsuit contends that the Catholic Diocese failed to meet contractual promises it made to St. Clare’s employees over the decades. It argues that the Diocese and its bishops (the lawsuit also names current Bishop Edward Scharfenberger and former Bishop Howard Hubbard as defendants) controlled St. Clare’s Hospital, and subsequently the St. Clare’s Corp., through a variety of means, including its control of the hospital’s Board of Directors.

It further asserts that starting in 1959, the Diocese made all major decisions affecting the rights and benefits of the St. Clare’s pension plan participants, and that the Diocese and the bishops are therefore responsible for the insolvency of the pension fund.

The diocese, however, has said that it is not responsible for the crisis and lacks the money to fix it.

The lawsuit was filed jointly by the Legal Aid Society of Northeastern NY; the AARP Foundation; Legal Services NYC-Brooklyn Legal Services; and a solo attorney. The plaintiffs include former nurses, orderlies, laboratory technicians, clerical and housekeeping staff, and others who worked for years — in many cases, decades — at the old St. Clare’s Hospital near Central Park in Schenectady.

St. Clare’s Corp. in October 2018 notified the 1,100-plus retirees it would soon reduce or end their monthly checks due to insufficient money in the pension fund, then implemented the cuts.

“Plaintiffs face continuing and increasing hardship due to the loss of pension income,” the suit claims. “They are left with no alternative but to file the present suit.”

Claiming a breach of contract, the pensions’ suit argues that the St. Clare’s employees accepted their job on the expectation that a pension would be part of their compensation — in some cases foregoing other, more high-paying jobs. The former employees fulfilled their promises to St. Clare’s Hospital, the suit argues, but the hospital failed to fulfill its promises.

The lawsuit maintains that the St. Clare’s pension plan was a “church plan,” attempting to link the St. Clare’s plan and the promises to its many beneficiaries directly to the Albany Diocese. The hospital sought and received a ruling from the IRS that it was a “church plan” in 1992 in an effort to exempt it from a federal law that governs funding requirements and pension insurance for retirement plans.

The new suit also alleges St. Clare’s and diocese officials mismanaged the pension plan for years, failing to make payments into the retirement fund while assuring employees they would receive their pension benefit if they were vested upon retirement.

In a March court filing requesting the St. Clare’s Corporation be dissolved, lawyers for the corporation said the pension plan was underfunded by around $53.5 million. New York State Attorney General Letitia James has objected to the dissolution effort, recently seeking more information to try to sort out the pension situation.

After St. Clare’s closed in 2008 and received $28.5 million in state money as a pension fund bailout, the suit alleges, officials continued to mismanage the retirement plan and mislead pensioners. In 2016, a letter told pensioners that the plan would eventually run out of funds — sometime between 2024 and 2028. However, in October 2018, officials notified pensioners the plan would be terminated much sooner than originally anticipated, then soon made the cutbacks.

Esposito, the Legal Aid Society attorney, is representing two St. Clare’s retirees, both of whom worked for the hospital for around 30 years. Both of them have been living with the assumption that they would be able to rely on their pension in retirement, Esposito said. But since the pension plan has spiraled toward insolvency, she said, her clients have had to adapt to a more constrained lifestyle. One of her clients had to sell his home, she said; the other is very focused on the start of the month, when her bills are due.

“Instead of having the lifestyle she worked for and expected, she has had to drastically cut back what she is able to do and that’s not fair,” Esposito said of her client.

The lawyers hope the litigation can also bring relief to pensioners not party to the suit, and local lawmakers also lauded Tuesday’s filing as a positive step for the pensioners.