Jackson County

SRHS believes it can make $156 million in payments to pension plan. Is that enough?

Singing River Health System retirees listen during a hearing in Chancery Court in 2015. Roughly 200 of the SRHS retirees broke from the federal settlement in hopes of finding out what caused the plan’s failure.
Singing River Health System retirees listen during a hearing in Chancery Court in 2015. Roughly 200 of the SRHS retirees broke from the federal settlement in hopes of finding out what caused the plan’s failure. amccoy@sunherald.com file

Eleven hours in the courtroom Monday with U.S. District Court Judge Louis Guirola and Singing River Health System attorneys said they feel they made their case that SRHS is financially able to pay into the failed pension.

SRHS attorney Kelly Sessoms also said he believes Guirola understands that time is running short for the pension plan and will make his decision as soon as possible.

He used the term expedite, Sessoms said.

In addition, Guirola indicated he would rule on the federal class action settlement and then issue a separate opinion on the $6.4 million in attorneys fees that were built into the settlement to be paid in the first four years.

Retirees and current employees with Singing River Health System heard Monday in Guirola’s courtroom that SRHS would be able to pay $156 million to the pension over the next 35 years.

The problem is, attorneys for a group of 200 retirees who have fought the federal class action settlement believe the money won’t last nearly that long, even with the SRHS infusion.

The new pension plan manager, special feduciary Traci Christian has reported that with 725 retirees to pay and hundreds set to come onto the pension, the $123 million in the plan now won’t last past 2025 without the settlement, and with it, the payout could be 59 percent.

Whether SRHS could pay and what retirees could expect to receive were two of four questions the 5th Circuit Court of Appeals wanted answered when it questioned the fairness of the settlement Guirola approved it in 2016 and returned it to him for reconsideration.

SRHS officials said Guirola told the courtroom Monday the Appeals Court questions didn’t mean the settlement couldn’t be approved.

After listening for more than five hours Monday, Kim Monson, 40, who still works at SRHS said she believes that if the hospital system pays its part and certain adjustments are made — early retirement and the 13th check eliminated and the retirement age increased to 67 — she could see some money in 27 years, whether she still works there or not.

“With some changes to the plan, there is a possibility for me to receive benefits at 75 to 81 percent,” she said about one option that was discussed in court. Still, she wasn’t able to determine how much money that would mean for her.

With no settlement, she said, the plan would be broke by 2025.

“No settlement would hurt those of us that are still working,” she said.

The settlement applies to almost 3,200 people, some who paid in and left and hundreds who are still planning to retire.

It’s in Guirola’s hands now, but attorney Harvey Barton, who with attorney Earl Denham represent the 200 who have fought the settlement, said, “They’ll just gain a few years with the settlement.”

“If it’s such a great deal, let Jackson County guarantee it,” he said. As it’s set up now, the pension has $123 million and is making payments of $1.2 million to $1.4 million a month to 725 retirees, with no money coming in. There are 900 who paid in 3 percent for years and left and are entitled to get their money back, he said. Hundreds are set to retire in 2024.

Barton said he believed even Transamerica, the SRHS retirement plan administrator, showed none of the payout models would work based on the money available.

Even with the settlement, “at some point, it will go broke,” he said.

Lead attorney for the settlement, Jim Reeves, said in a statement: “As a practical matter, there is no way to make the hospital pay more and the hospital is not in a financial position to pay more even if ordered to do so. For these reasons, we hope that the plan will be approved, so that funding can begin as quickly as possible as additional delays continue to reduce available benefits to all.”

Barton said he expects Guirola to approve the settlement.

“And we will appeal again to the 5th Circuit Court,” he said.

“Yesterday (Monday’s fairness hearing) was to make the record (for that appeal),” he said. “The evidence presented flies in the face of what the 5th Circuit wanted.”

And he said that if that fails, they still have their appeal to the U.S. Supreme Court, made last year.

As a matter of background, the hospital system announced four years ago financial problems that included claiming tens of millions in revenue it wasn't receiving, failing to keep up with bond requirements and having little cash on hand.

One solution was to end the generous employee pension plan and return the assets as payout.

Retirees sued and formed a class action, with a team of attorneys led by Reeves. About 200 retirees, looking for answers to what happened, hired attorneys Barton and Denham to fight the hospital and the settlement in hopes of also getting 100 percent of the pension promised them when they worked for the hospital system.

The pension was frozen and during the four years, retirees have collected 100 percent of their pension in their checks each month.

If the settlement passes, it appears that amount would decrease significantly.