A judge conditionally approved a proposed settlement agreement to resolve class-action lawsuits on behalf of participants in the insolvent St. Joseph Health Services of Rhode Island Retirement Plan, according to court documents.
Rhode Island Superior Court Judge Brian P. Stern provided the conditional approval to the settlement agreement proposed by Stephen Del Sesto, the receiver for the pension fund. The proposed settlement now needs approval in U.S. District Court.
Provisions in the proposed settlement include an immediate lump-sum payment of at least $11.15 million and admission by the settling defendants that the plaintiffs' damages are at least $125 million.
This proposed settlement could resolve lawsuits filed in June alleging that St. Joseph's Health Services stopped making necessary contributions to the retirement plan, resulting in it being grossly underfunded. The lawsuit also claims the defendants collectively conspired to conceal the underfunding to participants.
The 2,700 plan participants learned in August 2017 when it was placed into receivership that the plan had been inadequately funded for years, according to the lawsuit filed on behalf of Mr. Del Sesto.
Defendants in the lawsuits include Prospect CharterCare LLC; Roger Williams Medical Center; Roman Catholic Diocese of Providence; and St. Joseph Health Services of Rhode Island, which sold Our Lady of Fatima Hospital and Roger Williams Medical Center to Prospect CharterCare in 2014. The pension plan was founded by the diocese.
The plan was declared insolvent three years after the hospitals were sold to Prospect CharterCare, with a $43 million pension shortfall, according to the lawsuits. The sale included a $14 million payment to the plan, but not ongoing contributions.
Mr. Stern's approval now enables Mr. Del Sesto to petition the federal court for approval of the proposed settlement agreement.
"We're pleased at the judge's decision," said Max Wistow, partner at Wistow, Sheehan & Loveley, who is special counsel to the receiver. "But there's still a long way to go."