Big news: on December 16, RWJBarnabas Health and St. Peter's Healthcare System announced that they had signed a letter of intent to become "strategic partners" going forward. According to a letter to employees by Saint Peter's President and CEO Leslie Hirsch, the specific structure of the resulting organization is presently undetermined, pending a more detailed agreement to be reached in the coming months.
The decision is in line with recent announcements and moves by Saint Peter's management to make the organization a more attractive takeover target. Never referred to as an outright acquisition of the Catholic Saint Peter's by the independent RWJBarnabas, the structure of the deal will allow the Saint Peter's part of the organization to remain in some respect affiliated to the church. A "Frequently Asked Questions" document distributed with the announcement states that the status of Saint Peter's facilities will remain unchanged for the foreseeable future, and that the partnership will enhance the outpatient services offered by Saint Peter's University Hospital. However, posing itself the question whether the hospital might merge in the future with nearby Robert Wood Johnson University Hospital, it doesn't quite issue a flat denial. The FAQ also hints, by avoiding direct statements to the contrary, that salaries and benefits, including retirement plans, are subject to change once the merger is finalized. However, it specifically states that the system "remain[s] committed to funding Saint Peter’s frozen defined benefit pension plan." (We can't help but note that retaining the church affiliation allows Saint Peter's to preserve the pension's financially advantageous "church plan" status.)
Read the Hirsch letter, the FAQ, and an article on the announcement in Modern Healthcare. If we hear of more developments we'll pass them along.
The management of Saint Peter's University Hospital is using the church to exempt itself from the Federal safeguards that protect your retirement plan. For an introduction, see Your Pension At Risk.
Tuesday, December 17, 2019
Friday, June 14, 2019
It's Alive
This is the first update to the blog in over two years. You could be forgiven for thinking there is no more to write on the subject of the Saint Peter's pension, but events are progressing... and hope springs eternal.
In their 2017 ruling on the original Kaplan v. Saint Peter's Healthcare System lawsuit, the Supreme Court reversed an earlier appeals court ruling and decided that ERISA's church plan exemption "applies to plans that are maintained by church-affiliated organizations whose principal purpose is to administer or fund the plans, even when those plans haven’t been established by a church." (Quote from Cohen Milstein update cited below.) However, in August 2018, litigant Larry Kaplan filed an amended complaint, with a particular focus on the increased risk of default brought on by Saint Peter's declaration of church plan status, underfunding the Plan by $130 million and ceasing PBGC insurance coverage after thirty years of operating as an ERISA plan. On April 30, U.S. District Judge Michael A. Shipp denied Saint Peter's motion to dismiss, allowing the suit to proceed. The amended lawsuit is very much alive.
As a reminder of what can (and often does) happen when church hospitals mismanage and abandon their retirement plans, here's the Star Ledger/NJ.com's Karin Price Mueller on a lawsuit filed in state court by retirees of now-closed St. James Hospital against the Newark Archdiocese, for raiding their retirement plan and allowing it to fail. The archdiocese claims that when the hospital was sold in 2008, responsibility for the plan passed to no one. As Saint Peter's recent targeted refurbishments hint that the hospital may be seeking a buyer or merger, we worry that a similar fate could befall Saint Peter's pension plan.
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