Click here for a short summary of the issue. Click here for a detailed timeline.
See also the Pension Rights Center website.
Click here for ex-St. Peter's CEO John Matuska's 2011 letter to the IRS.
Click here for ex-St. Peter's VP of HR Bruce Pardo's 2011 letter to the IRS.
Haga clic aqui para verun resumen del problema en español.

Tuesday, October 15, 2013

Class Action Lawsuit Progress

In the Documents section at right are links to documents from the class action lawsuit Kaplan vs. Saint Peter's Healthcare System: the original complaint, Saint Peter's motion to dismiss, and the plaintiffs' memorandum in opposition to the motion. Note that the motion and the memorandum are Zip bundles containing multiple PDF files. Note also that in the opposition bundle, the amended versions of Exhibits C and D in the separate files supersede the versions in the file "Memorandum in Opposition." (We tried stripping out the old versions, but this would have resulted in a much larger download.)

The plaintiff's opposition is on multiple fronts which we will not attempt to summarize here (perhaps in a future post). Most interesting, however, is the argument that Saint Peter's claim that the Bishop of Metuchen exercises complete control over SPHS, made under penalty of perjury in accompanying affidavits by SPHS personnel, appears to contradict statements made by Saint Peter's to the IRS (also under penalty of perjury) and Saint Peter's own bylaws. We will convey any new developments about the lawsuit as we get them.

In other news, last week Saint Peter's VP of HR Susan Ballestero sent a letter to plan members regarding the Pension Rights Center's recent memorandum on the IRS ruling, withholding comment citing the active litigation. She also states that Saint Peter's will comply with whatever ruling results from the lawsuit.

Saturday, October 5, 2013

New AP Article on Church Plans

The Associated Press today released a great story by Adam Geller on how church-affiliated hospitals are saving money by removing the federal pension safety net. It's been published on the websites of many media outlets including NPR and the Washington Post; it should appear in Sunday's newspapers. The story discusses how many hospitals, including Saint Peter's, have embraced "church plan" status at the urging of their retirement consultants. This strategy enhances the hospitals' bottom line in the near term, and makes it much easier for them to break their financial commitments later, e.g., if the hospital fails or is sold. As the story explains, this is how the strategy has unfolded in the past at many organizations, and is now unfolding at St. Mary's Hospital in Passaic, which is trying to dump their pension as part of a pending sale.

Saint Peter's has been claiming all along that the hospital is controlled by the Diocese of Metuchen, and the IRS cites that claim in their recent ruling supporting Saint Peter's church plan status. We surmise that the same has been true at St. Mary's, and note with irony the following passage in the AP story:
St. Mary's would not answer questions about the hospital's management of its pensions or details of the pending acquisition. The Sisters of Charity of Saint Elizabeth, the Convent Station, N.J., order that sponsors the hospital, referred all questions to St. Mary's.
The article indirectly quotes Saint Peter's attorney:
A lawyer for the hospital, Jeffrey Greenbaum, said St. Peter's had the right to make the change because of its association with the Catholic Church, and it is not breaking its promises to workers and retirees.
If this story shows anything, it is that such claims are so much hot air. That the hospital says it is not breaking its promises today, and intends to keep them in the future, does not mean it won't welsh on them later if things go south. A church plan ruling means the hospital is free to fund – or not fund – the plan as they see fit, can save the money it would have spent on insuring the plan, and can keep the details of its operation a secret. The freedom to abandon pension commitments, along with the immediate cost savings, is the reason for pursuing a church plan ruling.

In other news, the plaintiffs in the recent class action suit have responded to Saint Peter's motion to dismiss the suit. We'll post in more detail about this soon.

Friday, September 27, 2013

IRS Ruling Follow-Up

The IRS private letter ruling that granted "church plan" status to Saint Peter's pension plan is here... though the odd "Mad Libs" style used by the IRS makes it nearly incomprehensible. Pension Rights Center has provided a version of the letter which is much easier to understand; it makes all the proper substitutions and highlights some of the more pertinent passages.

Karen Ferguson of the Pension Rights Center has published this memo which analyzes the IRS's decision and clarifies where we go from here. We urge all interested parties to read and distribute the memo.

Pending the result of the ongoing class action suit ‒ and the probable subsequent appeal ‒ the IRS ruling leaves the pension plan without the protections previously provided under federal law. It allows SPUH to fund (or continue to under-fund) the plan as they see fit and to stop insuring the plan against default. The decision allows the hospital to save a large sum of money on a continuing basis, at the expense of the financial security of its employees and retirees.

The (Middlesex County) Home News Tribune carried a story about the IRS ruling on August 29th. In it, SPUH attorney Jeffrey Greenbaum repeats an often-used SPUH claim that the ruling doesn't allow the hospital system to take money out of the pension plan. This of course misrepresents plan members' concerns: we aren't worried about the hospital taking money out; we're worried that they won't put enough money in to keep the plan solvent. Retiree Monica Mosley echoes the concerns of many members: "They would like to say they’re a church plan since 1974, but when I was working for them, they said they were ERISA. Why should I believe what they tell me now?” Another story on the ruling by Hazel Bradford has been published in Pensions & Investments.

In other news, SPUH recently updated its Social Media Policy. It contains a (likely new) requirement that if an employee "is contacted by a blogger, online journalist or media representative about the business of the organization ... he/she must notify their reporting manager and the Marketing/Communications leadership before responding." This is significant, given recent instances of SPUH firing employees for the smallest policy infractions.

Friday, August 23, 2013

Saint Peter's Gets Their IRS Ruling

According to a brief letter released by Saint Peter's to all plan members yesterday, the IRS has ruled that the Saint Peter's pension plan is a church plan, and has been since January 1, 1974. We cannot comment on the actual ruling, as we have not seen it. The class action suit brought on behalf of plan participants is still alive; we don't know what effect the recent ruling will have on the course of the suit.

Wednesday, June 26, 2013

Last Chance to Send Comment Letters!

Comment letters to the IRS must be sent (and preferably received) by Friday, June 28. If you haven't submitted your letter yet, please do so! Feel free to use our comment letter templates.

Saturday, June 22, 2013

2002 Tax Form Reveals... an ERISA Plan

A leaflet that has recently been distributed at the hospital (not created or distributed by us) reproduces a very interesting tax form filed by Saint Peter's in 2002. We understand the form was obtained under the Freedom of Information Act and is public.

In February 2002, Saint Peter's filed IRS Form 5300, "Application for Determination for Employee Benefit Plan." Saint Peter's had evidently made a change to the Plan document and submitted this form to the IRS along with the revised document. The form is a request for the IRS to issue a letter confirming that the revised plan still qualifies for favorable tax treatment; that is, that it complies with the requirements imposed by federal tax law, including ERISA.

Note that in answering Line 7, "type of plan," Saint Peter's bypasses all the special cases – including "nonelecting church plan (i.e. an election under section 410(d) has not been made)" – and selects "other." In other words, Saint Peter's, in 2002, states to the IRS that the plan is not what they now claim it has been since 1974. The form jibes with former Saint Peter's CEO John Matuska's statement that throughout his 24 years on the Retirement Plan Committee (1977 to 2001) the Plan was always considered – in fact was – an ERISA plan, never a church plan. It contradicts most recent statements by Saint Peter's management about the status of the Plan since 1974.

The hospital claims that all such evidence, and indeed their entire thirty-two-year history of managing the Plan as an ERISA plan, is not relevant now. Since they now claim to have always been effectively a church (for pension plan purposes only), and since they never submitted a document stating that the plan was a church plan which elected to comply with ERISA, they claim that the Plan has always been a non-electing church plan. In their view, it doesn't matter that the actual reason such a document was never filed is because the hospital never considered itself a church – until 2006, once the benefits consultants got their hooks in.

We continue to be disappointed by Saint Peter's management, who must hide behind lawyerly word-parsing to support their claims, rather than acknowledging objective reality and talking straight as people do. The pending class-action suit should help decide whether the Plan's long history as an ERISA plan can be erased by a slick argument. In the meantime, your IRS comment can help draw attention to this evasion.

A gentle reminder: your comment letter to the IRS must be submitted by June 28!

Tuesday, June 4, 2013

Is the Tide Turning?

We may be witnessing a significant shift in the IRS's stance on the "church plan" issue, according to a recent article in Pensions & Investments magazine. It begins, "The IRS' long-term trend of allowing church-affiliated defined benefit pension plans to be exempt from federal pension rules could reverse course after an unusual decision by the agency and a flurry of lawsuits." You can read the article here. The article covers the IRS' recent decision to revoke the church plan status of Hospital Center at Orange, and the multiple ‒ now counting five ‒ class action lawsuits recently filed against Catholic hospital conglomerates including Saint Peter's. One lawyer quoted in the article opines that the IRS may delay further church plan decisions until the lawsuits are resolved. We shouldn't count on this. Take advantage of the golden opportunity granted by Saint Peter's re-application for church plan status to make your voice heard: submit a comment letter by the June 28 deadline, and convince your fellow employees and retirees to do the same.

Saint Peter's will be holding town hall meetings this coming Thursday and Friday, June 6 and 7, to discuss its new SPIRE strategic plan; the meetings will be chaired by Saint Peter's COO Kenneth Sable. Administration states that "employees are urged to ask questions" and that questions can be submitted in advance via a "question submission box." It's unclear if any questions not submitted via the box will be addressed. It's also unclear whether any of Saint Peter's administration responsible for the pension plan (CEO Rak, CFO Stoldt, or VP of HR Ballesteros) will attend. Still, if you attend one of these meetings and any of the above individuals are present, it may provide an opportunity to ask questions about the pension plan in a public forum. Clearly, the administration would rather address pension questions in private. If you or someone in your meeting asks a pension-related question, kindly let us know in the comments how it went. Thanks!

Saturday, June 1, 2013

Site Update

We've given the site a minor but much needed and long-overdue update. Specifically, we've taken two older posts, updated them and given them a permanent home on the site.

  • Your Pension At Risk is a short summary of the issue and an introduction to the site.
  • "Church Plan" Timeline provides a history of the Saint Peter's Plan and how it fits with the history of the "church plan" exemption.
The timeline, in particular, has been extensively rewritten and should be very useful in understanding the issues at hand. We plan to keep these pages up to date going forward.

Less than one month remains to send comment letters to the IRS. Please spread the word to your fellow employees and retirees!

Friday, May 31, 2013

IRS Comment Letter Templates Available

We have now posted sample letter templates for comments to the IRS. These templates give guidelines for effective comments to help convince the IRS to deny Saint Peter's latest attempt to claim "church plan" status for the pension plan. Since many current employees are concerned about reprisals from Saint Peter's, we have provided templates for both a signed and an anonymous letter. We have also provided a one-page fill-in-the-blanks template for people who feel intimidated by word-processing software, but we discourage its use; we believe a customized letter would be far more influential. If editing the template is a problem, try requesting help from a computer-savvy friend or family member, or write a handwritten letter along the lines of the template.

The IRS wants to hear from Plan participants, beneficiaries, and other "interested persons." Your comment must be received by the IRS by June 28, 2013 to be considered. Please tell your fellow retirees and employees about this opportunity, and pass along this blog's web address. The volume of comment letters received will mean a lot.

We have provided the templates in different file formats for compatibility with most word-processing software. If you have problems, please try another format; if problems persist, please post a comment and we'll do our best to help. You can access the letter templates here.

Thursday, May 23, 2013

More Details on Class Action Lawsuit

You can read the class action complaint in Kaplan v. Saint Peter's Healthcare System here.

The suit is the most recent of four very similar suits brought since late March against non-profit hospital systems by the law firms of Cohen Milstein Sellers & Toll PLLC and Keller Rohrback LLP alleging a collective funding shortfall of over $2.1 billion. Like the other suits, the Saint Peter's suit claims that the hospital system is not entitled to claim the church plan exemption under ERISA, since the Retirement Plan fails the eligibility criteria specified in ERISA as amended in 1980: it was not and is not maintained by a church or a church pension board, as defined in the law. The suits challenge prior rulings by the IRS and Department of Labor that have allowed organizations which do not meet the ERISA criteria, but have some connection to a church, to claim church plan status. There is much more background on all four cases in this excellent summary.

Cohen Milstein and Keller Rohrback are well-known and respected in the field of ERISA law, and we trust they will competently handle the case on our behalf – all Plan participants and beneficiaries are members of the class.

Saint Peter's sent a letter to Plan participants on May 17 referencing the suit, twice calling it meritless and "fundamentally wrong," and repeating the claim that the Plan has never been an ERISA plan and has always been a church plan, because their consultants and attorneys say so. We note too that in the hospital's April 24 letter, they claimed they would issue a Summary Annual Report for the Plan in the third quarter 2013. The hospital stopped issuing such reports, mandated by ERISA, since first claiming church plan status in 2006.

This suit does not mean we as Plan stakeholders should not take advantage of the very real opportunity afforded by the hospital's re-application for church plan status – to contact the IRS by June 28 and explain why the Saint Peter's Plan should not be ruled a church plan. We will follow up very soon with more info to make our case to the IRS and others who can help. In the meantime, please get in touch with your fellow employees and retirees, and ask them to watch this blog for updates.

Saturday, May 11, 2013

Class Action Lawsuit Launched Against Saint Peter's

Saint Peter's Retirement Plan participant Larry Kaplan has asked us to share the following statement.
A Class Action Complaint has been filed against Saint Peter's Healthcare System by Laurence Kaplan, on behalf of himself, individually, and on behalf of all others similarly situated. This lawsuit is brought on behalf of Plan participants who are covered by the original Defined Benefit Plan, which the Healthcare System is trying to convert to a Church Plan.

The complaint has been filed to convince the Court that our Plan should remain covered by ERISA with all of the benefits and not be changed to a Church Plan. Within the complaint are many reasons which describe why the Healthcare System is not entitled to change the Plan to a Church Plan. I cannot go into detail, but the complaint clearly covers the technical reasons for this change not to happen.

Our attorneys are a Nationally known firm based in Washington, D.C. and are handling this case on a contingency basis, so there is no money that we have to pay them at any time. Their fee will be determined by the Court, if the case is won, and will be ultimately paid by the Healthcare System. If we lose, the firm will not be paid by anyone, but will have put many man hours working on this complaint for our benefit.

Larry Kaplan
At present we have no further info on this announcement, but we will share info if and when it becomes available. We still expect to follow up soon on our previous post with information on responding to the latest IRS comment period.

Until then, some other related news: There's a new article in the Star-Ledger about the restoration of benefits for Healthcare Center at Orange retirees. Meanwhile, employees of St. Mary's in Passaic are losing their "church fund" pensions, as management there starved the fund and then sold the business. I'm sure they received similar reassurances as we have heard from SPUH management.

Tuesday, May 7, 2013

Saint Peter's Re-applies for Church Plan Status

In the past two weeks, Saint Peter's Retirement Plan participants have received two communications from Saint Peter's Healthcare System (SPHS) management. The first, a letter dated April 24, notified participants that a "corrected copy" of the IRS-mandated Notice to Interested Persons would soon be issued. (The Notice informs Plan participants and other stakeholders that SPHS has applied for "church plan" status to the IRS, which allows SPHS to evade federal protections – required contributions, insurance, etc. – that apply to most pension plans. SPHS filed their first notice in November 2011.) The new Notice followed on April 29.

The letter attempts to downplay the significance of the new Notice:
The first Notice stated that a ruling was requested for the plan year beginning January 1, 2006 (the year the application to the IRS was filed). The Notice should have stated that the ruling is requested for the Plan Year beginning January 1, 1974. This is the only change from the first Notice you previously received. The corrected date does not impact your rights under the Plan.
The change from 2006 to 1974 appears to be the only difference between the two notices, but this notice in effect amounts to a re-application to the IRS. Perhaps most importantly, the new Notice opens a new 60-day window for stakeholders to send comment letters to the IRS. Since the Notice was distributed on April 29, the new comment window extends until June 28, 2013. We will soon update this blog with much more information, including comment letter templates to help participants effectively communicate their concerns to the IRS.

In related news, a rare and stunning victory:  in late March the IRS overturned their 2003 decision to award "church plan" status to Hospital Center at Orange, rescuing the fund just as it was running out of money. It was this case that compelled the IRS to institute the moratorium that held up Saint Peter's application for "church plan" status from 2006 until late 2011, and to require that the participants be notified of the application. In short, they are the reason we get this chance to fight for our pensions, so we celebrate their victory. This New York Times article about the win mentions our pension plan and links to this blog. We welcome the exposure, and strive for a similar win!

More soon...