Singing River retirees file new lawsuit over failed pension. ‘It’s not fair,’ nurse says
Singing River Health System retirees are learning to live on lower pensions than they expected as attorneys continue to press for financial damages from companies they believe are responsible.
A new lawsuit has been filed over the 2014 failure of the SRHS retirement plan, which caught hundreds of retirees and employees by surprise. Biloxi attorney Jim Reeves is suing accounting firm KPMG LLC and Transamerica Retirement Solutions on behalf of 272 members of the retirement plan.
Reeves said in a news release that the companies were paid “hundreds of thousands of dollars to help manage and audit the pension plan and to accurately communicate the status of the plan to members.”
“Instead of doing their job,” he said, “these companies failed to protect the plan and for years took actions that helped conceal the hospital’s failure to fund retirement benefits. As a result, pension members lost millions. This lawsuit seeks to recover those hard-earned benefits.”
Similar lawsuits that Pascagoula attorney Harvey Barton filed on behalf of more than 100 plan members have been pending since 2017 in Jackson County Circuit, where Reeves’ lawsuit also is filed. The hospital system is suing KPMG in Hinds County Circuit Court, where the lawsuit was filed in 2015 and the case is also ongoing.
Retired registered nurse Cynthia Almond hopes the lawsuits filed on behalf of retirees, including a Barton lawsuit with her name on it, will put money into the pension so that retirees receive their full pay.
The 65-year-old struggles to manage on a monthly pension that was reduced by 25% and completely eliminated a cost of living increase that amounted to a 13th check each year.
“I’ve had to buckle down,” Almond said. “There were things I would love to do that I just can’t afford to do.” Almond said she will soon be forced to downsize to a smaller home and is unable to travel with her grandchildren.
“It’s not fair,” she said. “When we went to work there, they promised us a lifetime benefit. We won’t have it. We just won’t have it.”
Pension collapse stuns employees
The pension collapsed in 2014. Almond was the lead plaintiff in a lawsuit that prevented SRHS, the county’s second-largest employer, from liquidating the plan. Employee contributions did cease, but the plan, which had more than 3,000 members, continued to pay retirees.
SRHS eventually reached a settlement with plan members as part of a federal class-action lawsuit that Reeves filed.
But Almond, and many other retirees forced to accept the settlement, did not agree with its terms. It requires SRHS to pay $150 million into the pension over 35 years — the amount the company failed to contribute from 2009-14, plus interest amortized over the payment period.
The latest lawsuit filed by Reeves lays out claims that KPMG and Transamerica breached their position of trust with employees by leading them to believe their retirement benefits were intact.
From 2009 to 2014, annual reports to the retirees indicated SRHS was contributing its share to the plan. Employees were required to contribute 3% of their pay to the plan, but SRHS made less than half its required contribution in 2009 and stopped contributing altogether in 2010.
“At all relevant times, SRHS, Transamerica and/or KPMG were aware that SRHS was not making the annual required contributions to the plan and that the financial stability of the plan was in jeopardy,” the lawsuit says.
“This purposeful conduct was unlawful and/or fraudulent . . . “
Companies failed to warn employees, lawsuit says
Both companies had a conflict of interest that they failed to disclose because SRHS, not the retirement plan, hired them for auditing and financial services. The companies collected fees for services from the retirement plan, the lawsuit says.
Transamerica determined each year how much SRHS needed to contribute to the plan.
“If the hospital wasn’t paying their share . . . and Transamerica knows it because they were managing the money, they had a fiduciary duty to disclose to the beneficiaries (retirees) that, ‘Hey, the hospital system is lying to you,” Barton said Friday.
The lawsuit alleges KPMG was negligent in auditing retirement plan financial statements and either knew or should have known the plan was in far worse condition than audits indicated.
The lawsuit represents only the position of the retirees who filed it. KPMG and Transamerica have not yet filed responses.
Plan members are seeking damages from both companies to compensate them for their losses and also punitive damages because, the lawsuit alleges, KPMG and Transamerica breached their contracts for services with “reckless disregard” toward the rights of plan members.
Barton said he has calculated that some retirees have lost up to 40% of their pension income.
“And the problem is, it’s only going to get worse,” Barton said. “That situation is not going to improve.”
When the loss of her 13th check is included, Almond said that she has lost about 30% of her retirement income.
“I would love to get up and not be worried about, ‘Am I going to be able to afford this or am I going to be able to afford that?’,“ she said. “But I’ve got to say, I’ve got a strong faith. I know the Lord is going to take care of it. I try not to worry.”
This story was originally published April 12, 2021 at 5:50 AM.
