“Bankruptcy can jeopardize all the work to support [pension] plan,” said Julie Pinkham, executive director of the Massachusetts Nurses Association and an administrator of the nurses’ retirement plan. “Until we see how things go for hospitals, we just don’t know.”
The future of pensions — whether workers can count on them for long — is tied to the fate of hospitals that serve mostly low-income neighborhoods and communities from Dorchester and Haverhill to Brockton, Taunton and Fall River. .
A lot is on the line for those who spent decades caring for patients. Retirees like Karen Kravitz, 72, who worked 46 years as a nurse at St. Elizabeth’s Hospital in Brighton under Caritas and Steward, dependent on pension income to move to high-cost Massachusetts.
“If I didn’t get my pension,” said Kravitz, who is still paying a mortgage on her Stoughton home, “I don’t know how I could live.”
The new pension concerns differ from those that prompted the Archdiocese of Boston to sell its Catholic hospitals to Steward more than a decade ago. The pension plan was underfunded, and Steward, backed by a private equity firm, was the only potential buyer willing to assume the liability and put money into the pension plan. Today, the plan is independently managed, federally insured and financially sound.
By contrast, Steward owes about $9 billion to owners, lenders, contractors and service providers, according to a debt report the company filed in a May 7 bankruptcy hearing. The pension plan will need new hospital operators to ensure its long-term viability.
For now, pension payments continue as before. In the session, Judge Christopher Lopez issued an order allowing Steward, who filed for bankruptcy on May 6, to continue paying wages and benefits. This includes company contributions to the pensions of approximately 2,500 active nurses covered by employment contracts at Steward Hospitals.
The contracts between Dallas-based Steward and the nurses’ union contain so-called succession clauses that require any operator that buys the hospitals to honor the terms of the contract, including pension obligations. But those protections won’t stand if Steward can’t find a buyer.
Steward has agreed to sell its Massachusetts hospitals by the end of June. The company said it has received letters of interest, but no bidders have been announced. If new owners cannot be found and some hospitals close, this would reduce the income flowing into the pension fund, making it more vulnerable to market investment volatility.
“Without new owners, there are no new contributions to the fund,” Pinkham said. “And that would be potentially devastating.â€
A Steward spokeswoman declined to discuss the future of the pensions, but said Steward is leaving the plan in good standing. “The current plan is fully funded and supported by the PBGB,” she said, referring to the federal agency that insures and protects retirement plans.
Pensions are not the main concern in bankruptcy court in Houston, where Steward’s lenders and creditors are haggling over who gets paid and how much. But nurses who dedicated their careers to serving patients at Steward Hospitals see the pensions as a matter of justice, something earned on the job and in tough contract negotiations.
“We fought for pensions, for all of us,” said Joan Ballantyne, 67, a longtime Norwood and St. Elizabeth’s nurse who is considering retirement.
The pension plan’s history mirrors that of the state’s Catholic health care system. The original plan, called the Caritas Christi Pension Plan, dates back decades, covering not only nurses but secretaries, kitchen staff, maintenance workers and even some doctors. Many of them worked in Caritas hospitals, others in church-run nursing schools, nursing homes and other facilities, some of which have been closed.
By the time Caritas put its hospitals up for sale, the pension plan had been frozen, meaning Caritas had stopped making contributions. The plan was unfunded and uninsured; because of a religious exemption, the Catholic system did not have to pay into the Federal Pension Benefit Guaranty Corporation, which thus could not guarantee payments to beneficiaries if there was not enough money in the plan.
The solution was to convert to the so-called Taft-Hartley pension plan, a multi-employer insured plan that covered workers from different companies. Under an agreement reached with the nurses’ union shortly before the sale to Steward, the hospitals agreed to place pension contributions for active nurses in an escrow account until the new plan was formed.
Steward and the union eventually chose to merge with an existing fund for workers represented by the Teamsters in funeral parlors and other industries in New York. In December. On 15, 2015, they deposited pension and savings assets into what was renamed the Nurses Pension Plan and Local 813 IBT. It collects funds from Caritas Christi’s legacy plan with money earmarked for active nurses and around 1,800 teams.
By joining established Taft-Hartley plans, unions looking to pool their resources “have the advantage of not having to start over and deal with all the administrative overhead,” said Gene Kalwarski, chief executive of Cheiron in McLean, Va. , which provides actuarial services for private and public sector pension funds.
At the same time, Kalwarski said, multiemployer plans are prone to the same long-term trends as other pension plans. Many employers have stopped contributing to pensions, old industries that provided pensions are shrinking, and baby boomers are retiring. There are often more retirees collecting benefits than workers paying into the system.
Because Steward does not disclose its finances to regulators, there is no public record of when the company injected money into the pension plan. At the end of 2014, four years after it promised to fund the Caritas plan, the pension liability was $368 million, according to a 2015 state attorney general’s report. But in late 2015, data provided from the nurses’ union show that Steward had transferred $605.3 million to the new plan to fund the legacy pensions of Caritas Christi employees.
The following year, Steward sold the land and buildings on which his hospitals are located to Massachusetts Medical Properties Trust, an Alabama-based real estate company, leaving the hospitals with multimillion-dollar rent payments. In March, it agreed to sell its national physician network, Stewardship Health, to UnitedHealth’s Optum unit.
Steward has said it plans to exit the Massachusetts market, but its workers — and their hopes for a secure retirement — will remain.
With asset sales clouding the future of Steward Hospitals and complicating their sale, the nurses say buyers can still count on them and other employees to come to work and treat patients every day.
“We are the most valuable asset,” Pinkham said.
Robert Weisman can be reached at robert.weisman@globe.com.
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