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NEWARK, N.J. (ChurchMilitant.com) - The archdiocese of Newark, New Jersey is facing a class action lawsuit by over 100 retirees who claim they lost their pensions due to financial mismanagement and removed assets.
The retirees were employed at St. James Hospital in Newark, New Jersey, which closed its doors in 2008.
The retired employees sent letters about their pensions from the archdiocese and from Cardinal Joseph Tobin. They said that, since they never received a response, they had no choice but to file a lawsuit.
Rich Salvia, the former CFO of St. James, said, "We were trying to be fair from the get-go to communicate but we didn't get the same courtesy back."
"Hopefully, the cardinal gets involved and rights a wrong," he added.
According to the lawsuit filed in the Superior Court in Essex County, the archdiocese deliberately underfunded the plan for the pensions promised to employees and removed assets.
Eventually, there was no more money. Those who were already receiving pension checks stopped receiving them in November 2017. Those who were supposed to receive pension checks after 2017 never received any.
"The archdiocese of Newark should have the willingness to be up front and center, to unequivocally address the issues of underfunding, misplaced funding or even ignoring that they did indeed provide for a pension and handle it themselves," said Sharon Holutiak.
The lawsuit claims that the archdiocese did not transfer responsibility for the pension with the sale of St. James, meaning the archdiocese is still responsible for the pension.
An attorney for the archdiocese contradicted this claim. The archdiocese is sympathetic toward the retirees in this situation, assured the attorney, but it is not responsible for this pension.
One of the letters referenced in the lawsuit shows the diocese stating, "The Pension Plan was fully funded and you will receive, when due, the full amount of your vested retirement benefit."
The archdiocese intentionally did not inform the retirees that there was a change in the pension plan that would remove federal pension insurance protections, according to the lawsuit.
Hospital pensions plans, which included St. James, began as traditional ones subject to the rules of the Employee Retirement Income Security Act (ERISA). The rules require a minimum amount of funding and pension insurance.
The religious hospitals requested that the IRS change the classification for the plans to "church" plans in the 1990s, which are exempt from ERISA. The request was granted, leaving the pensions without protections or guarantees.
"Church" status was granted to St. James in 1996; however, employees were told the pension plan was funded and the changes would "have no impact on your right to receive a future monthly retirement benefit from us."
"The archdiocese not only breached its moral obligations to its former employees, but also its legal obligations as a contracting party and a fiduciary under New Jersey law," states this class action lawsuit, which claims breach of contract, breach of fiduciary duty and promissory estoppel.
Promissory estoppel "refers to the doctrine that a party may recover on the basis of a promise made when the party's reliance on that promise was reasonable, and the party attempting to recover detrimentally relied on the promise."
The former employees and their pro-bono counsel is waiting for the archdiocese's attorneys to respond to the lawsuit.
They are disappointed that their shepherd, Tobin, has yet to respond to them.
"We're just hoping everybody reevaluates after the cardinal hopefully gets involved," said Silva.
Charles Brennan, the former president and CEO of St. James, clarified that the goal is not to "jump out and attack Tobin."
The retirees simply want the pensions they were promised.
"This is probably the last opportunity for [the archdiocese] to sit down and look at this fairly and honestly as a religious organization and not as a corporate structure, so they can make a determination about what's honorable and fair," said Brennan.