St. Clare’s pension crisis leaves some disillusioned with church

St. Clare's Hospital pensioner Mary Hartshorne wipes a tear as New York state Attorney General Letitia James announces the lawsuit this past week

St. Clare's Hospital pensioner Mary Hartshorne wipes a tear as New York state Attorney General Letitia James announces the lawsuit this past week

SCHENECTADY — For some, the St. Clare’s Hospital pension crisis is more than a loss of income: It’s a betrayal by an institution they believed in, even placed on a pedestal.

The lawsuit filed Tuesday by the state Attorney General’s Office against the Roman Catholic Diocese of Albany alleges numerous instances of negligence and intentional wrongdoing that led to more than 1,100 former employees of the defunct Schenectady hospital losing part or all of the pensions they had been promised.

But more than that, the lawsuit contends that the diocese, two bishops and two officials actively worked — repeatedly over the course of many years — to conceal the growing crisis from employees and rejected steps that would potentially soften the financial blow that would hit them in retirement.

Pensioners routinely vent their anger about the diocese on the St. Clare’s coworkers’ Facebook page and other venues. The details in the lawsuit’s 37 pages prompted a fresh eruption this week.

Four of the pensioners spoke to this newspaper about the anger and sense of betrayal they feel, and how it has shaped their relationship with the Catholic Church or their opinion of it.


“It’s the feeling of abandonment — there’s no other way to say it,” said Jerry Adach of Rotterdam. “It’d be like your own father turning his back on you, that’s how I felt.”

Adach — who was born and raised Catholic, attended local Catholic schools and still attends a Catholic church — said his belief in the institution began to waver as decades of covered-up clergy sex abuse came to light. Then his pension evaporated, and he and his wife had to push back their retirement plans.

“So I’ve been struggling for the last maybe two years,” Adach said. His faith in God is as strong as ever, but his trust in the Catholic Church is gone and he’s considering switching to another denomination.

“It’s all because I’ve been so let down by that whole institution,” he said. “They’re not holy people, they’re human like us. I guarantee, a lot of people are shaken.”

Adach still recalls an almost reverential feeling about working for St. Clare’s and the ideals it embodied as a safety-net hospital, caring for the uninsured and underinsured in an urban community where there were plenty of both.

“Honestly, when I worked at St. Clare’s, in my mind it was such a noble place to work. It extended the healing ministry of Christ.”


Some background:

  • Named as defendants in the lawsuit filed Tuesday are the Roman Catholic Diocese of Albany; Bishop Edward Scharfenberger; his predecessor, Bishop Emeritus Howard Hubbard; The Very Rev. David LeFort, vicar general; the St. Clare’s Corporation, successor entity to the hospital that merged in 2008 into what is now Ellis Medicine; and Joseph Pofit, long involved in management of the corporation and pension plan trust.
  • The defendants are alleged to have violated their fiduciary and legal obligations under state law.
  • The pension plan was established in 1959 and terminated in February 2019, eliminating all or some of the benefits for a little more than 1,100 former St. Clare’s employees who had given 10 to 50 years of service. It will take an estimated $55 million to make them whole.
  • The AARP Foundation in 2019 sued the diocese on behalf of dozens of pensioners; COVID and legal maneuvering have slowed that case, and there is still no resolution nearly three years later.
  • The diocese said Tuesday it is sympathetic to the pensioners’ plight and wants to see their hardships resolved as soon as possible. But the allegations in the attorney general’s lawsuit are not new and will only delay resolution, it said.


Mary Hartshorne of Malta has been leading the fight for her fellow pensioners these past three years, since the passing of Lori Daviero of Amsterdam, an early organizer of the effort. 

A writer is tempted to tack the word “tireless” onto Hartshorne’s name, given how many times she’s pressed the case and how many avenues she’s pursued, except that she does get tired sometimes, and frustrated. 

The lawsuit was one of the only bright moments since the pension fund collapse was announced in late 2018, and it came as a surprise to Hartshorne, with very little advance notice.

She struggled emotionally at times after New York state Attorney General Letitia James turned the microphone over to her Tuesday at a news conference outside the former St. Clare’s Hospital.

“The pensioners are suffering terribly,” she said. “Out of the blue comes — this. I don’t even know how to say it except, thank you.”

Hartshorne was born and raised a Catholic but broke with the church in her teens, after she started to not trust her parish priest. Yet the church’s teachings endure within her more than a half-century later, and they were an integral part of the operation of her longtime employer, St. Clare’s.

“Everything was based on our faith and that’s been the hardest thing for me,” she said about the church’s handling of the pension crisis. “We’ve been not just lied to but we’ve been spit upon.”

“It broke my heart, but I wouldn’t let them break my spirit. I still have faith and I have faith in most of the Catholic upbringing that I had.”


Since the pensioners were notified in October 2018 that they would lose some or all of their benefits, a recurring issue has been how much responsibility the diocese and its leaders had for the pension fund collapse and how much responsibility the diocese, with its presumed financial resources, bears for fixing it.

None and none, the diocese maintained. At one point, a diocese spokeswoman contacted The Daily Gazette to set the record straight when the newspaper published a story stating the diocese “operated” St. Clare’s. The two were merely “affiliated,” the diocese maintained.

But even that early in the saga, numerous uncontested details showed an extremely close connection that endured for decades — before the hospital opened in 1949, during its 59 years of operation and after it went defunct.

The lawsuit goes further, stating the diocese had direct control of management of the hospital and its pension fund.

It states: “The failure of the pension plan was the result of a series of both negligent and intentional wrongful acts by the named defendants and other directors and officers at the direction and under the control of the diocese and its bishops.”


Angie Stewart of Altamont had just retired and started drawing from the pension fund when it was canceled. She got a total of three checks for her 30 years at St. Clare’s.

“In my conversations with [a priest] I spoke to him about the pension and said it was quite distressing, and said maybe God just wants me to be poor,” she said, sardonic but not really making a joke.

Stewart is another pensioner born and raised Catholic but long removed from the church, having switched to the Reformed Catholic Church when she married a member of that faith.

She had dabbled with the idea of going back to the Catholic Church once their children were grown, but said that’s unlikely.

“I’m a very strong, faithful person,” Stewart said. “I don’t think any of this is of God. I guess my gut [feeling] with all of this is the Catholic Church, I’m very disillusioned. They were always held at a very high standard. It just shatters me to know that behind all that there is a good deal of dishonesty, just supporting one another.”

She marveled at the diocese saying the new lawsuit would only delay resolution of the case, as the diocese’s lawyers have been making the AARP lawyers pry loose information bit by bit in protracted court proceedings.

“I hope they get their comeuppance.”


The lawsuit offers numerous factors in its assertion that the diocese is responsible for the pension fund:

  • St. Clare’s Hospital, later known as St. Clare’s Corporation, was and is controlled by the diocese.
  • The sitting bishop has authority to control the board of the corporation as an automatic member and its honorary chairman; has authority to name the chairman and a majority of the members; and has veto power over selection of all directors. 
  • Hubbard and Scharfenberger appointed directors who by their own admission were incompetent to govern the affairs of the corporation and unable or unwilling to undertake their fiduciary responsibilities; often skipped meetings; and did not act in the best interest of the corporation when it conflicted with the diocese.
  • The corporation’s office was at the diocese headquarters in Albany.
  • Hubbard, bishop from 1977 to 2014, was a member of the corporation board the whole time and its self-appointed chairman from 1999 to 2008.
  • Scharfenberger has been honorary chairman and a board member from 2014 to present.
  • Pofit was a board member and officer of the corporation from 2008 to present as well as a de facto employee of the diocese — he was paid by Catholic Charities for his time, even though Catholic Charities had no involvement with the corporation and its governance. He worked under the direction and control of the two bishops.
  • LeFort as vicar general of the diocese has responsibility on behalf of the diocese to support, maintain and cooperate with the corporation. He acted as Scharfenberger’s legal representative. 
  • The corporation’s organizational chart refers to its board as subordinate to the diocese.
  • The diocese through its officers or trustees controlled the corporation board, as provided in the bylaws established by the diocese in 1945.
  • The diocese is vicariously liable for breaches of fiduciary duty by the bishops, LeFort and Pofit.
  • When the corporation and diocese sought a religious exemption from federal pension regulations, they represented to the federal government that hospital employees were diocese employees and that the diocese controlled the hospital.
  • Scharfenberger personally approved termination of the pension plan and the petition filing for dissolution; he, LeFort, Pofit and other board members all signed it.


It took James a while to summarize her lawsuit at Tuesday’s news conference, as she laid out details, spoke of laws broken and described individual financial impacts.

But she also veered away from the letter of law to the concepts of faith and duty, which she said were central to the matter at hand. 

“I am a woman of faith and my faith guides me,” she said.

“It encourages me and I am taught to help others, especially the vulnerable, especially those who unfortunately are the victims of injustice and those that may not be able to help themselves.

“So I cannot allow this institution of faith and charity to get away with doing such harm to this community.”


The lawsuit paints a timeline of the actions that cost the pensioners the late-life financial security they’d been promised — and been banking on. It states and alleges:

  • On Jan. 29, 1992, the IRS granted the diocese’s and corporation’s request to declare the St. Clare’s pension plan a church plan, which made it exempt from the Employment Retirement Income Security Act (ERISA) and not required to buy insurance through the federal Pension Benefit Guaranty Corp.  
  • The pension debacle was the direct result of the corporation and diocese not complying with state laws that they were subject to once they were removed from federal regulations.
  • The Corporation and its directors took no steps to obtain other pension insurance coverage.
  • Hubbard and Scharfenberger didn’t appoint a single person with expertise and experience to provide oversight of the pension plan and its funding agents, particularly after the hospital closed and the only business of the board was administration of its pension plan. Instead, they appointed certain individuals who had an overriding duty of obedience to the bishop and diocese but no relevant knowledge, skill or competence.
  • Actuarial consultants advised the corporation how much it needed to contribute to the pension fund each year but the corporation made smaller contributions or no contribution at all every year from 2001 to 2017. Nonetheless, in its annual IRS Form 990 filings, it reported making full actuarially calculated contribution amounts for each of those years.
  • From 1999 to 2006, the plan went from being fully funded to underfunded by $43 million
  • The board, led by Hubbard, increased retirement ages and eliminated early retirement options in 2006 and 2007, both moves prohibited under state law.
  • The corporation board asked Hubbard in 2007 to consider combining the pension plan with other diocesan pension plans but he declined, saying a review found it not feasible. No evidence of any such review was found by the attorney general’s staff.
  • Scharfenberger much later refused a similar request, and refused a request to provide financial assistance to the pension plan.
  • The corporation sought a $28.5 million state bailout of its pension fund in 2007, though two plan actuaries had said that amount was inadequate.
  • Having received $28.5 million from the state in 2008, the corporation failed to take steps to cover the remaining deficit.
  • After the hospital was defunct, in June 2008, Hubbard disbanded the board, usurped all authority and made himself sole director of the corporation, then appointed Pofit to wind up the affairs of the hospital. Hubbard breached his fiduciary responsibility to monitor and administer the pension plan during the financial crisis that set in soon afterward; as a result the plan lost millions from May 2008 to August 2009.
  • Hubbard reconstituted the corporation board in 2009, appointed Pofit its president and maintained control over Pofit at all times.
  • On Jan. 1, 2011, the corporation board created the St. Clare’s Retirement Income Plan Trust to manage the pension fund’s assets and made every sitting corporation board member (aside from Hubbard) its board of trustees.
  • Not one of the trustees had pension experience or expertise. They held no meetings and conducted no business from 2011 to sometime in 2017, and left management of the plan trust entirely to the corporation board.
  • The corporation board in 2017 unanimously voted to rejoin ERISA and purchase PBGC coverage, but Scharfenberger instructed it to reverse its vote. The board did so unanimously.
  • At that point, faced with loss of liability insurance for themselves individually, the board unanimously voted to terminate the pension plan and dissolve the corporation. Scharfenberger, LeFort and Pofit made this decision based on their own interests, not the fiduciary obligations they owed to the corporation.

The diocese on Friday declined to comment on the alleged actions the lawsuit blames for the St. Clare’s pension crisis, and declined comment on the disillusionment felt by some of the pensioners who also are parishioners of Catholic churches. 


Pete Jones of Amsterdam was one of the longtime St. Clare’s employees who saw his pension reduced but not eliminated.

Like others in that category, he says he worries about pensioners who wound up with nothing after the pension fund collapsed more than he worries about himself.

Jones feels anger about how it played out and also feels a little irony, as he was a human resources manager hiring and onboarding the employees who would lose their pensions decades later.

“It was my job to say, ‘You’re going to have this pension’ during the orientation. I feel guilty. I know it’s not my fault.”

Jones sees another irony — his childhood lessons from the church about not lying or stealing. “They’re doing the opposite of what they’ve been teaching.”

He added: “St. Clare’s was a wonderful place to work but all this — I don’t think it was even the hospital — this is so dishonest. If they had changed the insurance so that we were no longer eligible for ERISA they should have told us that so we could save differently.”

Jones was a practicing Catholic for 64 years. He still believes in God, but is now a member of a Lutheran congregation in Rotterdam.

“The [sex abuse] scandals did it, but when we had the whole thing with the pensions I said, ‘I’m out of here.’

“I don’t know how anybody who’s affected by this could still be Catholic or still be contributing to the Catholic Church.”


Categories: Business, News, Schenectady, Schenectady County



I read the “paper” version…..fascinating. I suspect that the journalist, John Cropley, will  get an award for this excellent piece. Contempt for people/employees and abject hubris was rather palpable. It’s sad to see just how far my Church has fallen. 

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