Boston Globe: Nuns take O’Malley to court over pensions

We commend the Boston Globe for their article today, “Nuns take O’Malley to court over pensions.”  as well as the Associated Press for also picking-up the story, now running in the Boston Herald and no doubt across the country.  BCI urges everyone to read the articles, and we invite the lawyers involved to keep reading below to find some additional insights that perhaps might help you.

The gist of this is as BCI first reported March 9, Boston Archdiocese Sued Over Pension Plan.  The Globe captured it well, so we will share their reporting of the situation:

In a highly unusual case pending before the Supreme Judicial Court, an order of nuns is suing Cardinal Sean P. O’Malley, the Roman Catholic archbishop of Boston, after years of trying in vain to withdraw from a church-run pension fund.

Nuns fighting a cardinal in court is almost unheard of, and their lawyers say they are doing so only as a last resort.

“The Daughters of St. Paul are just as unhappy as they can be about having to do this,’’ said Michael C. McLaughlin, an attorney for the nuns.

The nuns have asked the Massachusetts Supreme Judicial Court to order the pension plan trustees, who include O’Malley and several of his top aides, to provide them with a full accounting of the nuns’ portion of the fund, or to rule that the nuns were technically never part of the church-run plan and to order the archdiocese to reimburse the nuns’ contributions, plus returns. The nuns are also seeking attorney’s fees.

Their lawsuit alleges that representatives of the church-run plan were unable to supply data concerning the Daughters’ contributions and earnings required to effectuate the spinoff. The trustees, the lawsuit alleges, never kept separate records for each contributing employer — even though, it alleges, they were required to do so by the document establishing the trust.

BCI has not spoken to the Daughters or had any interaction whatsoever with them concerning this matter. Everything we report to you comes from other sources familiar with what is going on, and everyone we have communicated with feels the Daughters are in the right, and the archdiocese is in the wrong.  Here are several points to note which are not covered in the Globe article:

1) Pension Money Missing

As we reported in “Is Boston Archdiocese Committing Fraud?, $5 million is owed to the pension fund for employee pensions by closed parishes.  That has not yet been repaid, yet $2.5 was diverted from closed parish reconfiguration funds to pay costs of Finance Council member, Jack Connors’ pet Catholic Schools project in Brockton.  Another $40 million is owed to the pension fund by open parishes.  One might reasonably ask, is the amount the archdiocese is offering the Daughters for their contributions being reduced to adjust for other employer participants who the Archdiocese is not collecting from?  (Sidenote: as we know from our post yesterday, Diocese Defaults on Debt, the current administration is not one necessarily prone towards upholding all of their their financial commitments, but we digress..).

2) Accounting for All Benefit Funds

If it is not happening already, BCI thinks the lawyers for the Daughters should insist on a full accounting of all employee pension plan-related payments made over the past 5 years.  We know that $1.4 million was taken from insurance funds in 2010 to say that the 2010 Central Ministries budget was balanced (see “Easy Come, Easy Go” or graphic below.

And we already knew from the 2009 Annual Report (p. 75) that $2.6M was taken from the self-insurance program to cover the expenses associated with administering abuse prevention efforts and outreach to promote healing and reconciliation with survivors and others harmed by sexual abuse.

In what ways might the Benefits Trust funds intended for pensions have been used to pay other expenses (e.g. finance, accounting, HR, IT, etc) over the years that were not pension-related?   Has anyone talked to  or deposed Joe M. over in Risk Management to ask him in what ways Risk Management/Insurance reserve funds were used by the Chancellor to help balance the budget by cross-billing them to other departments?

How much from the Benefits Trust has been paid towards Carol Gustavson’s compensation, that started at $125K/year and supposedly increased to around $149,999–vastly higher than HR people in other dioceses are paid? Who else is paid by Benefits Trust funds and how much?  How do the benefits administrative expenses compare today vs the cost in 2005 before Jim and Carol arrived? If they are higher, why?

As we asked in “20 Questions About Pensions,” what has become of the many millions of dollars the RCAB has retained over the past 20 years as fee income from the investment returns for some other purpose or Corporation Sole expense?   Since RCAB charged these fees without license, why should the RCAB not have to make up all losses?

3) Hypocrisy

Carol Gustavson said the archdiocese requested information “demonstrating that the Daughters were equipped to oversee their employers’ own pensions.”  Why exactly is that required of the Daughters of St. Paul, when the archdiocese is saying Corporation Sole is neither equipped nor feeling morally bound to oversee  and fund their own employee pension plan?

4) Is Carol Competent to Hold this Role?

At one of the recent meetings with former employees, Carol Gustavson, an attorney and labor negotiator by previous occupation, said she was unable to answer an important question about the plan, explaining she was not as good with numbers as the former employee, gone 5 years, who asked the question. 

Sources familiar with Carol’s tenure in the archdiocese tell BCI that Carol had to ask employees or consultants basic questions about the attributes of a “Defined Benefit” vs “Defined Contribution” plan.  She was unaware of the need to file certain healthcare forms, required by law, and disputed knowledgeable employees and consultants who knew the requirements.  We are told that her emails had to be checked for errors, and sources indicate on one occasion, she was unable to do simple math regarding costs of a life insurance program that employees would pay for.  

5) Nature of the Negotiation

In the Globe article, Marcia S. Wagner, a pension law specialist whom the nuns hired in 2007, said she has never encountered such difficulty acquiring basic information to complete what she said should have been a straightforward matter.

“What struck me as most atypical is the incredible lack of responsiveness, the lack of any hard data or information, non-answers to very specific questions, and just endless, fruitless negotiations,’’ she said.

She added: “When you want to accomplish something that is par for the course and ordinary, and it becomes mired in arcane complexity, nonresponsiveness and non-answers, that will usually mean that something is amiss.’’

We have confirmed the validity of her comments.  Negotiations were characterized to BCI as “adversarial”  and occasions where “vitriol was spewed.”   One person told BCI, “The Archdiocese stonewalled them because they thought if the RCAB allowed the Daughters to exit the plan, then we’ll lose other organizations in the same manner.”

Then there is Carol G’s style.  BCI has it on good word that Jim McDonough paid a substantial amount of money not long ago to an organizational consultant he knew from his days at Abington Bank to try and help him resolve the dysfunction on his team.  (John Straub is the latest attempt at resolving the dysfunction). Of Carol, she was apparently found by the consultant to have low teambuilding and collaborative skill and to have created significant animosity amongst her colleagues within the department and across the Pastoral Center, which in turn created problems for the Chancellor.  She was perceived as a labor negotiator, not as an empathetic, fair, trustworthy head of HR.   That is not a personal attack, it is simply factual information. (Moving her out of high-level responsibility for HR and having her coordinate just benefits, the Pastoral Center floorplan and the phone system was an attempt to address those problems, but BCI thinks it would be better for her to be told she is simply not a fit for this organization). Some amount of your donations to the Catholic Appeal probably paid for the organizational consultant.

If Carol is not good with math, does not understand pensions and benefits, and does not get along well with other people, one might reasonably ask why she is still employed at the Catholic Archdiocese of Boston making a nice six-figure salary in a job that requires the aforementioned skills?  Answer: because she is seen by the Chancellor as loyal to him and his agenda.

Perhaps the Daughters’ attorney should also request a different archdiocesan representative to negotiate with.

6) Other Lawsuits?

This one lawsuit is just about getting pension funds back.  Though BCI knows of no other lawsuits, we hear that the Chancellor has nicely positioned the archdiocese for other potential lawsuits on age discrimination, especially by women.  For example, there is the manner in which the Chancellor pushed out his former administrative assistant after about 30 years of service.   People familiar with the situation report he said many times he was looking to hire a young blond secretary. (He ended up hiring a student, Peter, straight out of BC with no experience, and in short order he was making the same or more than the previous admin with 30 years experience).  Was it age discrimination, or simply that he did not want people around in the Chancellors and Cardinals’ offices who knew their jobs well, had institutional memory and connections to past leaders, and who would not let him break past promises?  How many other long-time knowledgeable, dedicated people over the age of 55 were pushed out with offers of early retirement on the basis that if they did not take the money at that time, there would be less in the future?

A BCI commenter wrote that when the Chancellor was hiring the new head of HR, he was overheard by a manager saying his goal was to hire someone who could “get rid of all these menopausal women” without triggering a lawsuit.  Nice Christian attitude, Jim.

So, there you have it.  Yet more reasons for a changing of the guard.  Does the Cardinal have the courage and backbone to make the tough decision to replace the Chancellor and other members of the cabal? We are asking this question not for BCI, but in order that the Cardinal can rebuild trust, take care of dedicated former employees living on limited retirement incomes, and ensure the future good works of the Catholic Church in Boston

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26 Responses to Boston Globe: Nuns take O’Malley to court over pensions

  1. DHO says:

    This is sickening. However, I must throw in a “You go, girls!” I admire their intelligence, their courage and their ability to stand up to the Big Dogs.

  2. Mack says:

    Also to note, as the Globe article points out, the sisters are doing this for their employees–not for themselves. It’s a matter of justice.
    Doesn’t the Catholic Catechism say something about justice? Maybe the Archdiocesan officials need to brush up on their catechism.
    It seems like the Archdiocese is imploding.
    Where’s the leadership?
    Dial “O” for O’Malley? The line is busy.

  3. Karen says:

    I agree with DHO and Mack. I give the good sisters a lot of credit for not letting themselves get bullied. With proper leadership in the archdiocese, this should never have had to get to this point. What country is Cardinal Sean visiting this week?

    BCI, you also deserve a pat on the back for breaking the story and keeping us all informed!

  4. A Priest says:

    This Cardinal will not make changes. In fact I dare say that it is my belief that he’ll just dig in deeper the more BCI and others criticize him or his people. He doesn’t want to have day to day management of the operations and yet he continues to put people in charge who are inept at best and criminally liable at worst…it’s so frustrating.

  5. Fr. D says:

    It appears that the Daughters are not here to be made sport of! VERY entertaining reading…look for others to follow suit, right up to the moment they “get the call.” May come from the Nuncio, maybe Rome, who knows, but the religious superior will get it for sure. Obedience can be such a disappointing thing!!

    Personally, they should walk away with the cash, hands down!!

  6. Former employee says:

    NPR and the AP has a little more reaction from Terry Donilon on the story:

    http://www.npr.org/templates/story/story.php?storyId=134741903

    “We’re happy to resolve this,” he said. “We are trying to ensure that when they withdraw, that there’s a plan, that they are going to continue to provide for the well-being of the beneficiaries of the fund. We don’t think that is a lot to ask.”

    I don’t get it. If the archdiocese is all “happy” to resolve this, how come they stonewalled for 5 years and left the religious sisters no option but to file a lawsuit? As for all the concern for the well-being of the beneficiaries, I wish I had seen some of that on display at the meeting held for former employees the week before last.

  7. Mary says:

    I bet this all stems from the “Rogers Legacy”! You remember them the family that did all the law work for the diocese and bold-facely paraded their style of luxurious living off the back of the people of the archdiocese. Incidentally Will Rogers the father of all these money hungry lawyers is a BC classmate of Jack Connors.

    However, I don’t think Connors had anything to do with his hiring. But then again, what do I know?

    • Another former employee says:

      This has nothing to do with Wil Rogers as he is not and never has been the lawyer for the Pension Trust.

      • Suzanne says:

        What Mary says about Wilson Rogers is absolutely false. Whatever one thinks of their work, the members of the Rogers Law Firm were and are faithful Catholics who have an outstanding record of orthodox belief and charitable work. To suggest otherwise is patently a lie.

      • Objective Observer says:

        Wil was not the trust counsel, but he wasn’t perfect either. So long as his former employee is training to succeed Beirne, the Rogers history that spawned the conflicts of interest with “related entities,” and carried on by Beirne, will persist.

  8. FR B says:

    I BELIEVE THIS IS JUST THE BEGINING ! I HAVE ALWAYS MAINTAINED THAT THE ‘SO-CALLED’ SEX ABUSE CRISIS IS MERELY SYPMTOMATIC OF THE TRUE DIRT NOT ONLY IN THE RCAB BUT ALSO IN THE ENTIRE USCC … STAY TUNE FOR MORE FINANCIAL DIRT ESPECIALLY ABOUT THE PERKS FOR BIG DONORS + THEIR BUSINESS ENTERPRISES.
    ONLY THE BALD TRUTH WILL ENABLE THE NEEDED REBIRTH, HEALING AND RENEWAL FOR THE AMERICAN CATHOLIC COMMUNITIES … LET PENTECOST COME! LET THE FIRE FALL !!

  9. FR B says:

    p.s.
    I JOIN EVERYONE IN PRAYING THAT THESE GOOD WOMEN, THEIR SUPERIORS AND LAY ASSOCIATES SUCCEED + THAT IF AND WHEN “THE CALL” COMES THEY IGNORE IT OR MERELY REFER IT TO THEIR LEGAL ASSISTANTS

    FURTHERMORE, I BELIEVE CARDINAL BURKE OF THE SIGNATURA WOULD BE MOST SYMPATHETIC TO THEIR PLIGHT.

    WHEREVER CARDINAL O’MALLEY IS THESE DAYS, SINCE HE IS A ‘FREQUENT FLYER’, HE JUST MAY WANT TO TEND TO THE HOME-FIRES!

  10. anonymous says:

    Pinocchio’s (Donilon’s) nose grew a couple of inches after his comments in this story. A true BS artist if ever there was one.

  11. [...] Boston Globe: Nuns take Cardinal O’Malley to Court Over Pensions – Boston Catholic Insider [...]

  12. Former Employee says:

    Is the Attorney the same Michael McLaughlin who took on the Boston Public Schools racial preference admissions policy regarding the exam schools? If so he’s tenacious and Quiotic.

    • Another former employee says:

      He is the same lawyer who took on The Boston Public Schools regarding the acceptance policy for the exam schools.

    • Objective Observer says:

      Well put, FE, he is tenacious and quixotic. He also succeeds, especially when his quest is against an injustice veiled by apparent virtue (Latin School’s set aside for minorities and RCAB’s squelching on promises of transparency). What Michael does is demand that people stop trying to reason with the irrational, and instead he imposes reason to reverse the irrational.

      Latin Schools’ set asides meant that seats went empty when kids from the quota group did not, for any reason, fill them. This notwithstanding a lower entrance exam score requirement, etc. His argument was that those seats could not go empty, and that if not filled by the quota group, they should be returned to the pool of admissions based on merit to accept kids who were seeking admission purely on merit, no matter their ethnic group.

      So he’s not afraid of a complex topic, and he’s not afraid of the media grasping the wrong end of the stick and trying to thrash him with it.

      All in all, he is the man for the job of seeking justice for the FSPs.

  13. A. J. Constantino says:

    I have held my voice for as long as I can!

    How can you expect to be taken seriously, when Mary takes to task the Rogers’ Law Firm for their “luxurious living” and at the same time, BCI regularly takes “in house” counsel to task for his salary?

    In the business world, lawyers are both a necessity and expense. Every time I call our corporate lawyers, I picture the “Wicked Witch” from the Wizard of OZ turning her hourglass!

    Many times, the postings are well thought out and valid. Not this one!

    You cannot have it both ways! The Rogers’ Law Firm was very expensive. Regardless as to how much an individual may be paid – have any of you considered how much is being saved by the RCAB by having “in house” counsel I would venture into the millions!

    At some point in time, we have to come to the realizarion this was a well thought out business decision!

    And for the record I AM NOT a lawyer!

    • A.J.,
      Good to have you back! Just to clarify your criticism of “the postings,” since BCI said nothing about the salary of the archdiocese’s in-house counsel in our original blog post, we assume you are taking issue with the reader comments.

      To the other readers, we appreciate your passion on this issue, but we respectfully request that everyone try to stay on the immediate topic of the lawsuit by the Daughters of St. Paul against the archdiocese. Costs for legal counsel would be a topic for a different post.

    • Another former employee says:

      You are correct, lawyers are a necessity. And Suzanne, Wilson Rogers and his firm did not get rich working for the Archdiocese. Was he expensive, not in comparison to other firms. Beirne Lovely is the in house counsel but he is not the lawyer for any of the benefit trusts – clergy or lay. Outside firms are used for that. Outside firns are used for other things as well so I am not sure how having in house counsel has saved the archdiocese much money. But as Boston Catholic Insider said that is a story for another day.

  14. [...] we read yesterday, the “incredible lack of responsiveness, non-answers to very specific questions, and just [...]

  15. Dan says:

    Your treatment of this lawsuit is a great example of what’s wrong with this blog. While quoting liberally from the nuns’ lawyers, you don’t include any of the comments in the Globe article from Terry Donilon or Carol Gustavson. Has it occurred to you the the plaintiffs’ attorneys may not be the most disinterested source of information on this dispute? Or even that there is more than one side to this story? Of course not, because you’re not really interested in the truth. You print only those selective facts, hallway rumors and vicious innuendos that can be twisted to create the impression that the Archdiocesan leadership is malevolent, dishonest and incompetent. This blog is just a petty, mean-spirited campaign to settle some personal grudges by smearing people who are trying to do their best for the Church. Shame on you.

    • Albert says:

      I have to say I have always found Carol to be very helpful. She always responds to my calls and is always able to answer questions about benefits.

      • Albert, we are glad you have found that to be the case. Other people have not experienced this. Obviously, the Daughters of St. Paul did not. It also appears the messages about plans to fully-fund the pension plan in the future were not the same at two different meetings with former employees.

    • Dan,
      You are entitled to your opinion, though we disagree with you. Everything in the blog post has been carefully fact-checked with more than one source and you have not identified anything that is incorrect. Was pension money owed from closed parishes paid to the fund as promised? No. Was money from closed parishes diverted elsewhere? Yes. Are people entitled to answers to the questions we raise? Yes. Have they been provided? No. Have all of the things we reported about various people occurred and been independently verified? Yes.

      What exactly makes you so positive that certain people (e.g. one who is a proud ex-Catholic) are motivated by trying to do their best for the Church?

      This blog has no personal grudges to settle. We would frankly like for the blog to have no reason for existing and go away. Integrity and transparency on the part of the RCAB could bring that about quickly.

      By the way, you forgot to mention that we have a record of much greater accuracy in what we report than what has come out from 66 Brooks Drive on the same topics over the past 9 months. Periodically we get a complaint like yours, and each time, the person complaining cannot disprove anything specific we have said. Perhaps it is mostly a matter that they just do not like seeing the reality of what is going on reported publicly.

      Since you obviously do not like the blog, we understand if you wish to not return.

  16. [...] David Smith on behalf of former employees, and the mediation session yesterday between the Daughters of St. Paul and the Archdiocese of Boston to try and resolve the stalemate over them getting their lay employee pension funds out of the [...]

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