Appeals court sends SRHS pension fund settlement back to lower court

Appeals court sends SRHS pension fund settlement back to lower court

NEW ORLEANS, LA (WLOX) - Singing River Health System retirees are right back where they were in 2014 when the health system admitted its pension fund was in trouble. They don't know how much pension money they should be receiving.

The Fifth Circuit Court of Appeals did not approve the settlement between Singing River Health System and members of its failed pension plan. The settlement will now go back to U.S. District Court Judge Louis Guirola for reconsideration.

In the 29-page ruling filed on Thursday, a three-judge panel ruled that, "There is no assurance in the record that the Plan will not run out of money to pay the class members' claims well before 2051."

The settlement negotiated by attorneys from both sides had Singing River Health System paying $149,500,000 back into the plan from 2016-2051. However, the appeals court determined, "The class members, especially current retirees, were owed something more than legal provisions enabling a speedy Chancery Court judgment for failed SRHS Settlement payments and a vague statement that changes in Plan distribution terms would be subject to notice and hearing. Money judgments are worthless if they cannot be enforced."

Attorney's representing 245 SRHS retirees who objected to the settlement filed an appeal in November 2016 after Judge Guirola approved the financial agreement. They argued it wasn't fair, reasonable, or adequate.

The appeals court found four reasons why Judge Guirola's decision should be vacated and the case should be heard again. Those reasons focused on the effect of the settlement on current retirees, future SRHS revenue projections, legal costs, and attorneys fees.

The appellate court justices concluded, "The terms of the Settlement Agreement as they affect Plan participants should have been more thoroughly examined prior to the court's approval. It was improper for the court to limit its consideration to the hospital's ability to pay while ignoring a transparent explanation of the settlement's consequences for the class members."

Matthew Mestayer was one of the attorneys who negotiated the settlement.

"Class Council is considering all options but remains confident in the Settlement Agreement and its ability to pay the retirees 100 percent of their benefits. Quite frankly, we're looking forward to returning to court as quickly as possible to further develop the record," said Mestayer.

SRHS CEO Kevin Holland released this statement Thursday afternoon:

“Upon initial review, the Fifth Circuit’s decision announced today is not a rejection of the proposed settlement, but rather a road map for successfully approving it with more detail and clarity on the terms of the agreement and how it will impact beneficiaries.   The court outlined four areas of concern to be addressed in cooperation with all parties to the settlement.    We still feel strongly that this settlement agreement provides the very best opportunity for the ongoing financial stability of not only the pension plan, but also our entire health system. 

We are reviewing the court’s decision with our legal counsel to determine next steps, and our strategy will be based on how to expedite this process in the best interest of all parties.  As we have maintained from the start, a protracted and costly legal battle does nothing to benefit the plan, its beneficiaries or our health system and the patients who depend upon us to care for them, so time is of the essence.

It’s important to note that the proposed settlement provides numerous new protections for beneficiaries, including oversight by an independent, court-appointed special fiduciary, who will be responsible for managing the Plan, its investments, and future distributions under the supervision of the court. In addition, as part of the settlement, Singing River has committed to support the Plan over the next 35 years with payments totaling $149 million to benefit retirees.  In fact, we have already deposited our first payments pursuant to the settlement into escrow as scheduled. 

While this case approaches its third year in litigation, our retirees have continued to receive their full benefit checks from the plan, and we remain committed to work with the special fiduciary overseeing the plan to continue providing benefits to the thousands of current and future retirees who have served our health system and our community.

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