Broken Promises and Shattered Dreams - Seeking Economic Justice for the St. Clare’s Pensioners

Victoria Esposito, Advocacy Director, Legal Aid Society of Northeastern New York

Imagine for a moment that you were employed by a religiously affiliated hospital for most of your working life.  You could have made more money elsewhere, but you believed in the work you were doing and trusted the hospital, in part because of its close relationship with the local church.  You also knew that the hospital had a guaranteed pension which would take care of you when you could no longer work, so you believed that you were making the right choice for your future.  How would you feel if, years later, the pension you earned were suddenly reduced or discontinued altogether?

The 172 plaintiffs in Hartshorne et al. v. Roman Catholic Diocese of Albany et al. don’t have to imagine what it would be like—they are living this. They are some of the 1,100 former employees of St. Clare’s Hospital in Schenectady, New York.  

St. Clare’s closed its doors in 2008 as a part of a statewide restructuring of the health care system.  Its pension fund was troubled even then, and as part of the closure the New York State Department of Health contributed $28.5 million to fund the pension.  The hospital’s former employees believed that this money guaranteed their promised pensions for the rest of their lives, and they were told that they could not lose the pensions once they vested.  

Former St. Clare’s employee John Owens pours over documents at his home Wednesday Jan. 25, 2017 in Menands, NY. He is among those who may lose their retirement income from St. Clare's Hospital in coming years. (John Carl D'Annibale / Times Union)

In 2016 the pensioners were told for the first time that the pension fund was running out of money and that their benefits would only last another eight to twelve years.  Many of the pensioners were retired, and they could not afford to pay attorneys.  However, they formed a committee to explore their options and found David Pratt, a professor at Albany Law School, to help them.  In 2017, the pensioners received a letter stating that their benefits would only last another eight to nine years.

In November 2018, they were abruptly informed that the retirement plan was being terminated. As of February 2019, about 440 pensioners’ payments were reduced significantly. The remaining pensioners received nothing—or, as the Albany Times-Union put it, “More than half of the former St. Clare's Hospital employees who were fully vested in the now-shuttered hospital's pension plan have been told that they will never receive a dime for their retirement.”  

The pensioners had not known that because of the religious nature and mission of the hospital the pension was a “church plan,” which was not federally insured and not subject to the safeguards of ERISA, the federal law which covers most pension plans. (It is estimated that approximately a million Americans are covered by church plans.  Of course, not every church plan is insolvent, but none of them are required to carry federal insurance.) Our clients had expected and planned for a secure retirement; instead, they had to sell homes, keep working, and change their dreams and expectations. 

Attorney Victoria Esposito, advocacy coordinator for the Legal Aid Society of Northeastern New York, center, speaks to the media after filing a lawsuit on behalf of St. Clare’s pensioners against the Roman Catholic Diocese of Albany on Tuesday, Sept. 10, 2019, at the Schenectady County Judicial Building in Schenectady, N.Y. She was joined by St. Clare’s pensioners and family members. (Will Waldron/Times Union)

Little by little, the pensioners added to their legal team.  In addition to Professor Pratt, attorneys from Brooklyn Legal Services; my organization, the Legal Aid Society of Northeastern New York (LASNNY); AARP Foundation; and Herzog Law Firm agreed to represent individual clients. On September 10, 2019 the legal team filed a breach of contract and breach of fiduciary duty lawsuit against the Roman Catholic Diocese of Albany; the Bishop of Albany; the former Bishop of Albany; the corporation which administered the plan; and a number of officers of the corporation and the former hospital.  

The Diocese, the Corporation, and the other defendants moved to dismiss the lawsuit.  The litigation was slowed somewhat by the COVID-19 pandemic, and we ultimately argued this motion via Skype. However, on July 15, 2020 the Hon. Vincent Versaci of Schenectady Supreme Court denied the motion, holding that the pensioners had sufficiently shown both that the corporation had breached its duties to the plaintiffs and that that the diocese might be liable.  Based on the judge’s ruling, we are moving forward with discovery, bringing the St. Clare’s pensioners one step closer to their day in court. We recognize that this is only the first battle and that there is a long road ahead, but we are honored and privileged to be fighting for justice for the St. Clare’s pensioners.