Roman Catholic Bishop Of Providence, Hospital Operators Accused in Pension Lawsuit

Jun 19, 2018

The Roman Catholic Bishop of Providence and hospital operator Prospect Chartercare, LLC are among the defendants accused of conspiracy and fraud in two class-action lawsuits filed late Monday.

The suits filed in state and federal courts accuse Bishop Thomas Tobin and hospital operators of deliberately underfunding St. Joseph Health Services’s pension plan and then lying about the plan’s financial condition to beneficiaries and state regulators.

The plan --  which covers at least 2,700  current and former employees of Our Lady of Fatima Hospital and St. Joseph Health Services -- was left with no source of revenue when the Fatima hospital was sold in 2014 to Prospect Charter, the local arm of the California-based for profit Prospect Medical Holdings. The pension plan is currently in receivership, a form of bankrupty.

The Diocese, which founded the pension plan, denied any wrongdoing.

“The Diocese of Providence strongly disagrees with the allegations asserted against it in this very long and complex lawsuit,’’ the Diocese said in an email Tuesday. “As we have stated from the very beginning, we continue to be concerned about the well-being of all those affected by the pension situation, and we hope that this matter can be resolved quickly and justly. Nonetheless, the Diocese will respond appropriately to these claims and we are confident that our position will prevail.”

The pension was set up as a "church plan,'' which meant it was not  federally insured and did not have the same funding requirements as plans covered under the federal Employee Retirement Security Act, or ERISA. The federal lawsuit, however, says the plan did not qualify as a church plan at least since 2009, meaning the plan's operators would have been required to meet specific funding thresholds. 

The suit, which asks for unspecified damages, names more than a dozen defendants, including the for-profit Californian-based parent of CharterCare, prospect Medical Holdings, Inc; Roger Williams Medical Center, LLC, The Rhode Island Community Foundation and the Angell Pension Group, Inc.

AMONG THE ACCUSATIONS:

  • For at least a decade, St. Joseph’s Health System of Rhode Island (SJHSRI) stopped making the necessary contribution to the pension plan, leaving it “grossly underfunded.
  • The defendants new the pension plan was “grossly underfunded” for at least a decade and conspired to hide it from the plan participants by repeatedly lying or misrepresenting the plan’s financial condition in presentations and handouts.
  • The defendants conspired with officials in the Diocese to falsely claim the pension plan was a “church plan,” which would have exempted it from federal ERISA rules and tax laws.
  •  
  • St. Joseph Health Service’s parent company, Prospect CharterCare, an arm of the California hospital chain, Prospect Medical Holdings, stripped $8.2 million in charitable assets from SJHSRI and its other subsidiary over the last four years. The money was either spent or put in a foundation the parent company controlled.
  •  Handouts to hospital employees contained “grossing misleading” and “false” statements assuring them they would receive monthly pension payments “for as long as you live,” and that the pension plans “is fully paid by the hospital.”
  • Hospital representatives lied to state regulators about the funding levels needed to sustain the plan after the hospital’s sale;
  • The Diocese assisted or advised in preparing false tax returns for St. Joseph’s Hospital falsely claiming the company’s nonprofit status

Read the  state Superior Court lawsuit here.

Read the federal court lawsuit here:

updated 3:35 p.m.