SCHENECTADY — When the Roman Catholic Diocese of Albany filed for Chapter 11 last week, it noted that its outstanding litigation with state Attorney General Letitia James and others over the collapse of the St. Clare’s Hospital pension plan is not the reason why it sought bankruptcy protection.
Rather, it was the more than 440 lawsuits that have been filed against the diocese under the state’s Child Victims Act since 2019 — 50 of which have been settled — that prompted the diocese to file for bankruptcy.
The diocese does acknowledge the ongoing St. Clare’s litigation, albeit briefly, in its bankruptcy papers filed March 15 in U.S. District Court in Albany.
But the papers note that the St. Clare’s cases, which have been consolidated in state Supreme Court in Schenectady for both discovery and trial, were “not a precipitating cause” of the bankruptcy as might be assumed.
In fact, the diocese went out of its way to try and assure St. Clare’s pensioners in a press release issued last week that the pension lawsuits are “not the diocese’s purpose for filing” Chapter 11, although it will have the effect of putting the pension litigation “on hold” during the bankruptcy case.
“The St. Clare’s pensioners are certainly close to my heart and, as I would do with anyone in a difficult situation, I offer my pastoral care,” Albany Bishop Edward Scharfenberger said in a statement.
The attorney general’s office, which filed its lawsuit against the diocese regarding the collapsed pension last May, has declined multiple requests to comment on the church’s bankruptcy filing and its impact on its case against St. Clare’s. Attorneys for the pensioners could not immediately be reached for comment.
The attorney general’s lawsuit alleges that top officials with the Albany diocese, including former Bishop Howard J. Hubbard, had mismanaged the fund and falsely told the Internal Revenue Service that required annual contributions were being made to the pension plan. The complaint seeks restitution for the pensioners, whose fund was created in 1959, about a decade after the diocese co-founded the hospital.
The attorney general’s office launched an investigation of the matter about three years ago under pressure from multiple state lawmakers; the office of state Comptroller Thomas DiNapoli determined it had no authority to investigate the pension fund’s collapse.
The former hospital workers learned five years ago that their pensions would be sharply reduced or eliminated because the fund was wiped out by a $50 million shortfall that was attributed to the 2008 recession and the Catholic church’s decision to stop funding it. The beneficiaries included laboratory technicians, nurses, orderlies, emergency medical technicians, and other staff members — some with decades of work history at the hospital.
The diocese closed St. Clare’s Hospital in 2008, and merged it with Ellis Hospital as part of the statewide hospital consolidation program. More than half of the 1,100 St. Clare’s pensioners have been told they won’t get any of their pensions owed. The remainder will only get 70 percent of what they expected after the diocese stopped making payments into the fund and cancelled the pension’s insurance, leaving the retirement plan with a shortfall of tens of millions of dollars.
Colm Ryan, an attorney for the diocese, wrote to state Supreme Court Justice Vincent Versaci on March 13, two days before the diocese filed for bankruptcy protection, asserting there was evidence that the attorneys general’s office — before James was elected to the position — knew that the pension plan had a major shortfall prior to signing off on the merger of St. Clare’s with Ellis. The attorney general‘s office oversees the regulation of non-profits and charities in the state.
Ryan said documents turned over by the attorney general’s office have made clear that office was aware prior to July 2010 that the St. Clare’s Retirement Income Plan was significantly underfunded.
