An Oct. 10 Rhode Island Public Radio story about a massive pension cut faced by nurses and workers who retired from Catholic hospitals featured commentary by Professor Norman Stein.

With the pension funds running out of money at hospitals like St. Joseph Hospital in Providence and Our Lady of Fatima Hospital in North Providence, the employees and retirees have been told to expect a 40 percent cut in their pension payments.

Stein said a review of the pension fund’s actuarial documents reveal that the fund faced shortfalls even before the two facilities were sold to a California-based hospital chain in 2013.

Though hospital workers had been promised that the buyer’s $14 million contribution to the pension fund would keep it afloat, Stein said, the actuarial report reveals otherwise.

“It looks like, according to the actuarial report, that would have been inadequate even given the actual reports that were done in those years,” Stein said, noting that the hospital had not been fully funding the plan even prior to the sale of the hospitals.  

The story notes that the Catholic hospital’s board oversaw the pension plan and that state regulators and the workers’ union both approved the sale without alerting employees that anything was amiss.

“There are two questions: who’s morally responsible and who’s legally responsible. You look at the people who failed the employees morally: everybody you named played a role,” Stein said. “God certainly wasn’t running these plans. Somebody was running them.”  

With pension funds for many church-affiliated hospitals, schools and organizations running out of money, Stein is frequently called upon to provide reporters with insights about the plight of workers and retirees facing reduced payments.

An authority on pension law, Stein has said the Employee Retirement Security Act enacted in the 1970s made churches exempt from regulations that apply to businesses because the government was leery of interfering in church affairs.  Over time, Stein explained, hospitals, health care networks and schools that cited affiliations with churches were permitted to sidestep regulations designed to ensure that pension plans would provide for retirees.

In June, the U.S. Supreme Court ruled that religiously affiliated hospitals are exempt from ERISA rules.