St. Clare’s pensioners win legal round; Lawsuit may go to trial in 2022

St. Clare's pensioners rally in 2019
St. Clare's pensioners rally in 2019

ALBANY — Pensioners of the former St. Clare’s Hospital on Thursday won a critical legal victory that will likely send their attempt to recover their lost benefits to trial.

The Appellate Division of state Supreme Court rejected an attempt by the Roman Catholic Diocese of Albany and the St. Clare’s Corporation to dismiss the pensioners’ lawsuit against them. Because the ruling was unanimous, its chances of being heard by the state’s highest court are slim.

The pensioners and their attorneys are hoping for a 2022 trial.

“I’m sure that they’re hoping we’ll give up, and we’re not going to,” said Mary Hartshorne, a former St. Clare’s sonographer who is leading the effort for the pensioners.

“This a milestone for us today.”

William Rivera, senior vice president for litigation at AARP Foundation, which is representing the pensioners at no cost, said the unequivocally written and unanimous ruling — along with the discovery process the legal team has been pursuing during the long wait for that ruling — has only built his confidence.

“We feel even stronger than we did at the beginning of this litigation,” he said.

The diocese commented via email:

“While we are sympathetic to the plight of the St. Clare’s pensioners, we respectfully disagree with the court’s decision. The Diocese, as the Catholic co-sponsor of the hospital along with the Franciscan Sisters of the Poor, did not own, control, or supervise the operations of the hospital or its employee pension plan. We continue to cooperate with the parties to develop all the facts associated with the pension, its administration, and its funding.”

This has been the diocese’s position since the crisis came to a head in autumn 2018, when 1,100 former employees of the defunct Schenectady hospital learned the pension fund was running out of money to pay them, and their benefits would be reduced or eliminated as a result.

The crisis was years in the making: The hospital was tight on money and made partial contributions to the fund or none at all for at least the last decade of its operation.

Because the fund was church-affiliated, it was exempt from federal insurance requirements, leaving no safety net for the pensioners when the money ran out.

The diocese has rejected responsibility for causing the crisis or paying to resolve it. 

The state of New York, which ordered St. Clare’s merged into what is now Ellis Medicine and provided a too-small pension bailout in the process, also has rejected responsibility.

The hospital’s successor entity, the St. Clare’s Corporation, has sought to dissolve and says it has none of the $50 million-plus needed to make the pension fund whole.

The diocese and corporation sought to dismiss the pensioners’ complaint against them but the trial court judge in July 2020 dismissed the motion. Thursday’s appellate ruling upholds that dismissal.

The wording of the ruling is what gives hope to Hartshorn and Rivera. Among the points:

  • The pensioners’ claims are not beyond the statute of limitations.
  • Documents offered as evidence that the corporation and associated parties had unfettered discretion to reduce or eliminate pension benefits are far from conclusive.
  • The diocese can be sued for the actions of the corporation because the pensioners allege it was an original cosponsor of the organization, that it operates out of the diocese headquarters and that it is listed in a directory of Catholic institutions.
  • Further, the pensioners’ complaint suggests the diocese oversaw and controlled the activities of the corporation; the bishop is automatically a member of its board and has authority to name four other members, and the corporation’s org chart shows the corporation as subordinate to the diocese.

It’s not a validation of the pensioners’ claims as valid, it’s a ruling that they are legitimate grounds to pursue a lawsuit.

Still, it’s better news than the pensioners have had in a long time.

Hartshorne was thrilled at this. “It feels like there’s a light at the end of the tunnel,” she said. “My people need something to brighten up their Christmas.”

This is a key point for the pensioners, many of whom were too old to start a new career when the pension fund failed. Legal maneuvering and COVID-related court slowdowns have caused the case to progress slowly: The plaintiffs are now three years older and have been deprived of three years’ worth of their promised benefits.

“If we can get relief for these pensioners as soon as possible, that is our goal here,” Rivera said. “Time is not on our side.”

He hopes but is far from certain that the case can be resolved before 2023.

On the plus side, he said, the AARP team has continued the discovery process through the delays and found additional evidence to bolster their case.

Retaining the diocese as a defendant was crucial, he added, because it would have money to pay damages if the pensioners win a monetary award.

The diocese’s contention that it did not make the decisions, the corporation did, is not a valid defense, Rivera contends.

Documentary evidence found during discovery has strengthened the team’s contention that the diocese controlled the corporation, he added.

“The relationship has been incredibly close over the years.”

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