New York’s lawsuit against the Roman Catholic Diocese of Albany for failing to fund the pensions of hundreds of former St. Clare’s Hospital employees can now go to trial, a state court ruled on Wednesday.
Acting State Supreme Court Justice Vincent Versaci sided with the state in denying the Diocese’s motion to dismiss the case, clearing the way for it to go before a jury. The judge determined that the corporation formed by the Diocese to manage the now-shuttered hospital in Schenectady breached its contract with more than 1,100 former employees when it ended their retirement benefits after years of underfunding their pension fund.
Close to 650 nurses, lab techs and other retirees of the hospital lost the entirety of their pensions and another 450 received just 70% of their pensions, the lawsuit alleges.
The ruling is the latest development in a decades-long saga of rocky finances for the facility, a 200-bed hospital that permanently closed in 2008. The troubles, which the lawsuit alleges were hidden from the state, spilled into public view in 2019 when the Diocese sought to dissolve the pension fund to shield itself from liability after letting it run a more than $50 million deficit, according to Attorney General Letitia James’ office.
The Diocese is currently in bankruptcy proceedings after multiple lawsuits over priests’ alleged sexual abuse of children under the state’s Child Victims Act.
In the attorney general’s suit, filed in 2022, the Diocese is accused of neglecting to pay into the pension for most of the past two decades. The group only made annual contributions to the fund twice between 2000 and 2019 while hiding the shortfall from the federal government, even as it sought money from Albany to bail it out, the lawsuit alleges.
The Diocese sought $28.5 million from the state’s Medicare coffers in 2007 to cover part of the shortfall, knowingly misleading authorities that the infusion would be enough to fund its pension obligations, the suit states. Despite an ongoing deficit, the corporation’s leaders did not seek additional funding, it says.
The attorney general’s office is seeking to hold the Diocese, the St. Clare’s Corporation and their leadership accountable to pay the pension debts owed to their former employees.
