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Forum: Pensions must be terminated

Published: Tue, July 7, 2009 @ 12:05 a.m.

By Peter H. Milliken

Northside must be turned around by Sept. 15, or it will close or be sold, bankrupt Forum Health says.

YOUNGSTOWN — The bankrupt Forum Health has said immediate termination of its 7,132-member pension plan is critical to its survival, and that it seeks to transfer the plan to the federal Pension Benefit Guaranty Corp.

“The debtors’ short-term survival will indeed be threatened unless the debtors are authorized to immediately begin the process of terminating the pension plan,” Forum said in a Friday bankruptcy-court filing.

Failure to begin terminating the ailing 41-year-old plan by July 16 “will cause irreversible damage to the debtors’ bankruptcy estates,” the health-care system said.

A hearing is set for 9:30 a.m. July 14 before Judge Kay Woods of U.S. Bankruptcy Court in Youngstown on Forum’s Friday request to end its pension plan and to void nurses’ and service workers’ union contracts at its Northside Medical Center.

In a prepared statement Monday, Forum said its Friday court filing will have no immediate impact on its day-to-day operations.

Also to be discussed at the July 14 hearing will be the motion by Forum’s creditors to deny Forum a four-month extension of its exclusive time to file a bankruptcy reorganization plan.

Forum Health, which filed for Chapter 11 bankruptcy protection March 16, consists of Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland, and various pharmacy, lab and home health- care subsidiaries.

Forum Health owes its lenders $139 million.

“Forum Health is burdened with heavy debt and revenues that, while improving, are still insufficient to cover the cost of the excellent medical services we provide the Valley,” said Walter Pishkur, Forum’s president and chief executive officer.

In 2007, pension plan assets exceeded liabilities, but, like almost all other pension plans, Forum’s plan deteriorated due to declining interest rates and lower than expected returns on invested assets.

As of last Dec. 31, the pension plan’s assets of $205,419,808 equalled only 63.7 percent of its $322,631,706 in projected benefit obligations.

Forum said it still hasn’t paid into the plan the $1,437,000 that was due April 15, and that it will owe quarterly contributions in that amount July 15 and Oct. 15, 2009, and Jan. 15, 2010.

“The debtors do not have adequate resources to continue to fund the pension plan,” Forum said in its filing, adding that most plan members are already retired.

Forum had previously frozen additional accrual of pension benefits for all of its employees, except those who attained age 55 and 10 years of service by Dec. 31, 2001. Only 124 people in that “grandfathered” group are still accruing benefits, Forum said.

Forum said it had notified the IRS and the U.S. Pension Benefit Guaranty Corp. of its motion to terminate the pension plan.

Forum’s management decided in April to ask the PBGC to take over the plan, which is underfunded by more than $100 million, and Forum notified its employees and retirees at that time, according to Forum’s Monday statement.

“Our management team chose to proactively address this situation, rather than let the pension fund become irrevocably underfunded,” Pishkur said.

If the PBGC takes over the plan, maximum monthly pensions for those who retire this year range from $1,822 for a 55-year-old who wants payments for a surviving spouse to $7,470 for a 70-year-old who does not want surviving- spouse payments.

In seeking to void the labor contracts of the Ohio Nurses Association and the Service Employees International Union at Northside, Forum said it needs to achieve $10 million in savings from those two unions.

That’s in addition to almost $20 million in other cost savings Forum said it has already initiated at Northside.

“Northside has experienced nearly continuous operating losses since 1998,” Forum said.

If Northside can’t become “cash efficient” by Sept. 15, it will close or be sold, Forum said.

If Northside closes, 1,500 people, including 1,120 union members, will lose their jobs.

In a prepared statement issued Monday, the SEIU District 1199 office in Columbus said union members are “not pleased” by Forum’s request to void their contract, but they “remain optimistic” about bargaining sessions scheduled with Forum later this month.

“Our membership is committed to working with hospital executives to reach an agreement that will keep the hospital system viable,” said Rob Johnson, the union’s hospital division director. “We look forward to getting back to the table with Forum.”

Forum’s request to void the labor contracts followed the acceptance of an 18-month concessionary agreement by ONA members.

Forum said that agreement called for the concessions to end too soon.

“It seems irresponsible, at best, to agree to a term that has the potential to send Northside immediately back into financial difficulties just 18 months after securing the cost savings,” Forum said in its court filing.


Forum Health | Financial woes

As of Dec. 31, 2008, pension plan assets were $205,419,808, and projected obligations were $322,631,706.

Forum still hasn’t made its $1,437,000 contribution to the pension plan that was due April 15.

Forum said it does not have adequate resources to continue to fund the pension plan.

Northside Medical Center has experienced nearly continuous operating losses since 1998.

If Northside can’t become “cash efficient” by Sept. 15, it will close or be sold, Forum said.

If Northside closes, 1,500 people, including 1,120 union members, will lose their jobs.

Source: Forum Health bankruptcy court filing

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