New York sues Albany Diocese over unpaid pension benefits

The New York attorney general's office said Tuesday that it filed a lawsuit against the Roman Catholic Diocese of Albany, N.Y., its leadership and others over alleged violations of their fiduciary duties, which resulted in 1,100 former hospital workers losing some or all their pension benefits.

According to the lawsuit, filed at Schenectady County Supreme Court, the Diocese founded St. Clare's Corp. in 1948 to operate St. Clare's Hospital in Schenectady, N.Y. Though the hospital closed in 2008, St. Clare's created St. Clare's Hospital Retirement Income Plan Trust in 2009 to hold plan assets on behalf of pensioners, including former nurses, social workers and other hospital employees.

In October 2018, according to an earlier lawsuit, St. Clare's informed former employees that most of them would receive either drastically reduced pension benefits or no benefits at all because it did not have the financial resources to fulfill its $53 million in pension obligations. Directors of the non-profit St. Clare's Corp. filed a petition for dissolution in 2019.

The new complaint alleges the diocese obtained a church plan exemption in 1992 to avoid ERISA contribution and insurance requirements, and failed to take alternative steps to ensure the viability of the pension plan.

Additionally, it claims the diocese "violated their fiduciary duties under New York law, by failing to make any annual contributions to the Pension Plan for all but three years from 2001 to 2009," and concealed the insolvency of the pension plan from pensioners and others through communications and misleading IRS Forms 990s.

New York Attorney General Letitia James is seeking full restitution from defendants for their alleged waste, misuse, and neglect of pension assets.

In a news release Tuesday, the diocese said, "We are sympathetic to the plight of the St. Clare's pensioners and want to see these hardships resolved as soon as possible. We respectfully disagree with the attorney general's decision to file this lawsuit."

Some former employees brought their own lawsuit against the diocese in 2019 in the same court. The case is pending and a trial date has yet to be set.

Referring to the employees' lawsuit, the diocese said: "This lawsuit seeks to replicate the same claims and the same allegations that are in the lawsuits currently pending before the court. Today's announcement does not raise any new issues. It will only lead to more protracted proceedings which will further delay resolution of the case."

According to the complaint filed Tuesday, more than 650 retirees lost all their pension rights, and nearly 450 retirees received a single payment equal to 70% of the value of their pension. "These former hospital workers nobly served their community and cared for the sick, elderly, and vulnerable. But when they retired, they were left with nothing," Ms. James said in a news release.