Jackson County

Attorneys still want their millions in fees from SRHS up front — and now they want more

Singing River Health System filed a motion this week to answer questions the 5th Circuit Court of Appeals had about the settlement it negotiated for a failed pension plan.
Singing River Health System filed a motion this week to answer questions the 5th Circuit Court of Appeals had about the settlement it negotiated for a failed pension plan. jcfitzhugh@sunherald.com file

Singing River Health System has addressed concerns the 5th Circuit Court of Appeals listed when the court questioned the fairness of the SRHS pension settlement and sent it back to U.S. District Court Judge Louis Guirola.

In a statement issued Tuesday, SRHS attorney Kelly Sessoms said, “In order to approve the settlement, the Fifth Circuit Court of Appeals asked for additional information regarding the health system’s financial health and ability to pay.”

The proposed settlement involves 3,200 current and past employees of the county hospital system, 200 of which are opposed to it on the grounds they feel it will fail within a few years from lack of funding.

Sessoms said that in a brief filled Monday, SRHS shows how “a financial turnaround is now generating enough net revenue to fund the proposed settlement for the foreseeable future.

“Singing River,” he said, “has already deposited over $7 million into an escrow account for the plan pending the outcome of the settlement, and committed to a total of $156 million over the next 34 years to support the plan, all under the supervision of the courts.”

Attorneys for the class-action settlement also filed a brief answering, among other things, why they need their fee paid sooner rather than later.

In vacating Guirola’s decision and sending the case back to him in July, the 5th Circuit Court panel told Guirola to consider four factors before approving the settlement.

One was whether the county health system would have the money and ability to pay in years to come. The panel also wanted to know why payments from other lawsuits in the case — like the one against auditors KPMG — wouldn’t supplement the settlement. It wanted to know how future payments and existing assets would intersect to pay claims.

And the court wanted to know why the class-action attorneys in favor of the settlement will get their fees paid up front, rather than face the same risk as the retirees and plan members.

The 5th Circuit panel wrote: “Perhaps the most intriguing fact is that” attorneys for the class action arranged for a complete payout of their fees from SRHS before the end of 2018, which alleviates any risk of not getting paid, while the plan participants “bear considerable risk and, worse, uncertainty.”

The attorneys for the class-action — including Coast attorney Jim Reeves and attorneys with Cunningham Bounds in Mobile — said this in their brief:

Typical fees are 25 percent, and they were only asking 10 percent.

The fee is to be paid by SRHS on top of the settlement and not come out of the settlement.

The fee is fair, considering they spent 7,800 hours and took the chance that SRHS might not make a financial turnaround.

“The involvement of a governmental entity, the substantial number of defendants and the multitude of defense firms that represent them, the time pressure associated with the daily depletion of the trust, an intense media spotlight, and unusual public attention also made this case particularly complex and difficult,” they said.

They warned the court that stretching payments over years to the attorneys for the class action “sets a powerful and chilling precedent that will” hurt the incentive for attorneys to take cases like this in the future.

And then they told the court they plan to ask for more money.

“In light of all of the hundreds of additional hours expended on this case since April 1, 2016 (the date of the original fee petition), class counsel intends to file a supplemental motion for attorneys’ fees and costs seeking a modification of the fee award” from the $4.8 million awarded in June 2016 to $6.45 million, an amount they originally petitioned for.

They said the class action has already been notified of that amount and has previously had an opportunity to object.

The attorneys asked the court to establish a payment schedule for the remaining $1.64 million.

On the other points, they said the longterm outlook for population growth and market for SRHS on the Coast is strong. And the class and trust have their own claims against KPMG that are not part of the settlement.

General pension status and information:

Since the plan was frozen in November 2014, retirees have continued to receive their full benefit check every month.

  • Investment returns for the fund were 8 percent over the last year, after investment fees and plan expenses were taken out.
  • The asset balance — $125 million.
  • Liabilities — $450 million, leaving it 28 percent funded.
  • Without a settlement, the fund could be depleted by 2025.
  • SRHS will repay, with interest, the money it told the pensioners it was contributing between 2009 and 2014 — $156 million, over the next 34 years.
  • SRHS is sticking to the settlement schedule and has made three deposits in escrow totaling $7.6 million.
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