Byline: Natalie Miller
A Superior Court judge has determined that a proposed settlement agreement executed between the receiver for the insolvent St. Joseph Health Services pension plan and several settling defendants named in an underlying federal lawsuit is in the best interest of the receivership estate.
Among its provisions, the plan provides for an immediate cash payment of at least $11.15 million to the estate, which represents 95 percent of the settling defendants' combined liquid assets.
Judge Brian P. Stern wrote that after canvassing the issues presented by the proposed settlement agreement, "this court can definitively say that the PSA falls well within a 'range of reasonableness,' and therefore, the receiver did not abuse his discretion in entering into the settlement."
With the ruling, the receiver, Stephen F. Del Sesto, is now authorized to petition the U.S. District Court for approval of the settlement agreement, which is a prerequisite to settling the class action brought there by Del Sesto. The class action alleges that a 2014 hospital sale was a fraudulent transfer designed to evade the retirement plan's obligations to its pensioners.
Additionally, the judge held that the claims of several non-settling objectors are not presently justiciable as they present issues of standing and ripeness.
"The objectors, collectively, suffer little prejudice from having to raise the same arguments expounded herein at a later time [in the federal case]," Stern wrote. "On the other hand, the plan's creditors entitled to benefit from the PSA would suffer a great setback were this court to disapprove [it]. On balance, the PSA provides the plan with much needed relief via an influx of capital, and is in the best interest of the plan's estate."
The 32-page decision is St. Joseph Health Services of Rhode Island, Inc. v. St. Josephs Health Services of Rhode Island Retirement Plan, Lawyers Weekly No. 61-088-18. The full text of the ruling can be found here.
First step in journey
Del Sesto said although it was only the first step in a multi-step process, it was an important one.
"The 2,700 plan participants are breathing a sigh of relief with this decision," he said.
According to Del Sesto, in overseeing the receivership, Stern gave appropriate weight to the relevant factors in considering whether the settlement agreement was reasonable and in the best interests of the estate.
U.S. District Court Judge William E. Smith will now examine the...