Attorneys secured for first St. Clare’s pensioner

St. Clare’s retirees who have seen their monthly pension payments reduced or eliminated have cleared a hurdle in their efforts to regain the money that was promised to them.

One of the former employees of the long-defunct Schenectady hospital has secured legal representation, a goal that had proved elusive due to the costs involved.

The two attorneys representing him could represent other income-eligible pensioners, but even if they represent only the one retiree, any resolution in his case could be precedent-setting for the 1,100 other ex-employees affected by the pension crisis.

David Pratt, an Albany Law School professor who has been advising the St. Clare’s pensioners at no cost but cannot represent them himself, said both attorneys work with Legal Aid.

One is Gary Stone, who practices in Brooklyn and has become a specialist on pension matters, Pratt said. The other is Victoria Esposito, and while her experience is more general, she is both local (Albany) and committed to the cause.

“I think it is quite significant,” Pratt said, noting the long effort to secure representation for the pensioners. Many attorneys, he said, couldn’t make the lengthy commitment of time with the uncertain prospect of payment such a case holds. Others were reluctant to publicly oppose the Catholic Church, which has become a focal point because St. Clare’s was affiliated with the Roman Catholic Diocese of Albany.

“It doesn’t necessarily mean things will turn out the way we hope they will,” Pratt said, “but I am very encouraged that Victoria is involved. She’s incredibly smart and incredibly eager. She’s got a real thirst for getting involved.”

Esposito explained: “It’s just a heartbreaking story. It’s just a matter of basic justice.”

THE CRISIS

St. Clare’s was a safety net hospital for many years, serving uninsured and underinsured patients. As such, it developed financial problems and made almost no pension fund contributions in its last 10 years of operation. It also used an exemption for religious-affiliated hospitals that allowed it to stop paying into the Federal Pension Guaranty Corp. That cost-saving move left its employees with no safety net when the pension fund tanked.

As part of an effort to streamline healthcare in New York in the mid-2000s, a state commission ordered St. Clare’s closed. It was absorbed into what is now Ellis Medicine in 2008; its McClellan Street campus is used today by Ellis for medical purposes, but not as a hospital.

The St. Clare’s Corp., which took over administration of the pension fund when the hospital closed, informed pensioners in the fall that there was not enough money to pay everybody what they were likely to be owed over their remaining years. Monthly payments would be reduced for approximately 440 pensioners and eliminated for approximately 660.

Panic and anger from the pensioners — most of whom are well into their 60s or 70s and unable to easily go back to work to replace lost income — was followed by efforts to regain their pensions, with a social media campaign and an online petition drive that had garnered 4,064 signatures, as of Friday.

Political interest followed, with local officials supporting the pensioners and calling for a bailout.

Three entities have been put forth as possible sources of a bailout: The diocese, state government, and Ellis Medicine. All have denied responsibility, to one extent or another.

In 2008 Ellis refused to take over St. Clare’s unless it was specifically absolved of pension responsibility. There is not a groundswell of opinion for Ellis to take responsibility now, and some pensioners express gratitude to Ellis for taking them on as employees when St. Clare’s went under.

The state paid $58.7 million to facilitate the takeover of St. Clare’s in 2008, including a $28.7 million pension bailout that was thought to be enough but fell far short. In late 2018, the state Department of Health rejected any further bailout and said the diocese had a moral responsibility to solve the problem.

The diocese maintains it never owned or operated St. Clare’s. But it was instrumental in getting the hospital built, in running it, in negotiating its closure, and in running the St. Clare’s Corporation after closure. Many pensioners believe that relationship was so close for so long that the diocese must bear some responsibility for the pension now.

THE SOLUTION

The diocese initially responded with a blunt denial of responsibility but has since struck a more compassionate tone. It held a meeting last month between pensioners and Bishop Edward Scharfenberger.

Many attendees were encouraged by the bishop’s attitude during the meeting, according to Pratt.

“They genuinely believed he was sincere in his desire to help,” he said.

But the diocese’s efforts to help and its compassion have not included any offer of money.

That’s why legal representation is significant. The last resort in any dispute is litigation, Pratt said, but the prospect of it can sometimes bring about a negotiated settlement.

“We hope that won’t be necessary,” he said of going to court.

Esposito doesn’t know yet if other pensioners will seek representation. They’ll have to meet income guidelines — 125 percent of federal poverty level — to be represented by Legal Aid attorneys.

Nor is this likely to become a class-action case, she said, due to the costs involved with that.

However Esposito said, even one settlement showing that there was a contract and it was broken will set a legal precedent.

“Say you have that decision in hand for one person, then you have precedential value for other persons,” she explained.

How that first resolution could be secured remains to be seen.

“What we’re looking at is the broadest possible range of options at this point,” she said.

The pension crisis has gained some attention beyond the Capital Region, due to the details and the number of people involved. Pratt said other attorneys out of the area have offered to assist in the case if needed — but not to be attorneys of record. Their reasons for that are mostly financial, rather than discomfort with opposing the church.

Mary Hartshorne, of Mariaville, one of the pensioners organizing efforts to gain relief, said the next step will be a meeting with a diocese official and three Schenectady-area state legislators on Jan. 21 in Albany.