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7/24/2019 New law tightens hospital conversion oversight
STATE HOUSE – The governor has signed legislation passed by the General Assembly to provide stronger oversight for hospitals being acquired by nonprofit entities.

The legislation, which was sponsored by Senate President Dominick J. Ruggerio and Rep. Raymond H. Johnston Jr., was a response to the St. Joseph pension system crisis. The hospital system’s pension fund became insolvent when contributions to it ceased following the sale of Fatima Hospital and Roger Williams Hospital to Prospect Medical Holdings in 2014. The $85 million fund covered about 2,700 current and former employees of the two hospitals.

“This legislation will help prevent what happened with the St. Joseph’s Health Services pension plan from ever happening again in Rhode Island,” said President Ruggerio (D-Dist. 4, North Providence, Providence). “Extended monitoring will provide the necessary increased oversight, while stiffer penalties will work to ensure those who don’t comply with the law are held accountable.”

The legislation (2019-S-500A , 2019-H 5695A) requires monitoring for hospital conversions involving non-profit acquirors, at the expense of the acquiror, and extends the monitoring following a conversion from 3 to 5 years.

The new law also doubles penalties for failure to comply with the terms of the conversion from $1 million to $2 million.

“The St. Joseph pension insolvency exposed the significant lack of oversight in this sort of conversion. Hospital conversions can have tremendous effects on communities, on patients and on thousands employees and retirees. There should be someone watching carefully to ensure that everything’s being done by the book, for everyone’s protection,” said Representative Johnston (D-Dist. 61, Pawtucket).

The bill was introduced on behalf of Attorney General Peter F. Neronha as a means to enhance the tools available to the Attorney General and Department of Health to monitor and enforce conditions imposed pursuant to a Hospital Conversion Act review.

“The passage of these amendments to the Hospital Conversion Act ensures that the Office of the Attorney General, as well as the Department of Health, have the legal and financial tools necessary to adequately monitor and enforce our conditions in future transactions,” said Attorney General Neronha.

The new law builds upon legislation passed earlier this session, sponsored by President Ruggerio and House Majority Leader K. Joseph Shekarchi (D-Dist. 23, Warwick), to bring further transparency by requiring defined pension plans with at least 200 members to comply with the federal Employee Retirement Income Security Act’s (ERISA) annual reporting provisions.

Last year, a law also introduced by President Ruggerio and Leader Shekarchi helped members of the insolvent pension plan to reach settlements in their multiple class-action lawsuits by better positioning members to reach fair, equitable settlements with the multiple defendants of the lawsuits.


For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903
(401) 222-1923