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Judge looking for fairness - not wrongdoing - in SRHS pension case

GULFPORT -- U.S. District Judge Louis Guirola Jr. made it clear to a packed courtroom Monday that he is not looking for culprits, but instead must determine whether Singing River Health System can pay $150 million over 35 years to settle a pension failure that has jeopardized retirement payments to hundreds of current and former health system employees.

Guirola will decide after the hearing, which continues Tuesday, whether he should approve the settlement as fair and reasonable on behalf of 2,067 retirement plan members.

The settlement amounts to $55 million SRHS failed to contribute to its pension plan from 2009-14, when the health system led employees to believe the contributions were being made. Paying over 35 years brings SRHS's total owed to almost $150 million with interest. The money will be used to pay monthly benefits to retirees.

Attorney Steve Simpson, the court-appointed trustee now overseeing the retirement fund, said its health hinges on SRHS settlement payments, investments and interest earned. He said he has no way of telling retirees how much their checks will be each month. The settlement represents the amount SRHS failed to pay, not what is needed to fully fund retirement benefits going forward.

"When people say, 'Can you tell me how much I will get?'" Simpson said, "I have to say, 'No.'"

Under the proposed settlement, attorneys representing pension-plan members would receive legal fees of $6.4 million paid over four years.

Attorney Jim Reeves of Biloxi is lead attorney for pension-plan members who struck the settlement deal with SRHS in a class-action lawsuit.

During the hearing, Reeves told Guirola that 94.6 percent of plan members are willing to accept the settlement.

Attorney Harvey Barton of Pascagoula and Earl Denham of Ocean Springs represent more than 200 plan members who oppose settlement. They say monthly retirement payments and amounts are not guaranteed. The settlement also releases SRHS and Jackson County, which owns the health system, from further liability over the pension failure.

Reeves presented testimony in favor of the settlement, calling SRHS's chief financial officer, Lee Bond, to testify. Bond said the hospital has cut spending over the past two years so that it is now operating at a slim profit. He believes SRHS can make the required annual settlement payments.

Barton then asked Bond if one of his employees was shredding financial documents after plan members filed lawsuits over the pension failure in late 2014.

Guirola shook his finger at Barton, saying, "Now, wait a minute, I'm running this.

" ... Now, let's say they took documents to the shredder and shredded the dickens out of them. How is that going to help me determine whether this settlement is fair?"

Guirola said he was not presiding over the hearing to determine if there had been any wrongdoing, or if anyone should be removed from office over the pension failure. Several retirees in the packed courtroom moaned.

Under the settlement terms, Jackson County will pay more than $13 million toward indigent care, freeing SRHS funds for annual settlement payments into the retirement fund.

Trustee Simpson can amend the plan based on its financial position, including the amount paid in retirement benefits. But he would have to give plan members 60 days' notice and secure approval from Jackson County Chancery Court.

Reeves' called several of his clients to testify about why they signed onto the settlement. They said they feared that SRHS would terminate the pension plan and they would receive no benefits. They also said they believe the settlement is fair to plan members.

Barton and Denham will call their witnesses Tuesday, including retirees who are suing SRHS in state court and oppose the settlement.

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