I’ve followed the unfolding Singing River Hospital financial disaster from afar and thus far have managed to not look at a single audit or financial report as I’m currently neck deep in paying work. That said I have seen woeful misinformation spread about Defined Benefit Pension Plans during the course of the reporting. Defined Benfit plans, if properly run, can still be an excellent and cost effective employee benefit and it is there we begin because many have been looted out and then dumped on the taxpayers:
Looting the Pension Funds ~ Matt Taibbi
‘Retirement Heist’: How Firms Trimmed Pensions ~ Interview with former WSJ Reporter Ellen Schultz, WTEST
At Singing River Hospital, the pension fund was not looted. Instead it was simply not funded by the hospital to the point now where management now claims that the plan is actuarially unsound. The implications of not funding a qualified defined benefit plan, which likely had mandated minimum funding requirements, are legion.
For instance, when most people think of qualified pension plans they think IRS, because it is the IRS that writes the regulations for plan qualification and actually approves the plans both when they are established and terminated. However it is not the IRS that Singing River Hospital needs to worry about in this instance as it is the Department of Labor, specifically the Employee Benefits Security Administration that would handle the potential ERISA violations associated with the media disclosures involving the Singing River defined benefit plan and that is the bad news because while the IRS “audits”, the DOL “Investigates”. Having handled a DOL Investigation once or twice in my time practicing public accounting, I can say first hand it is far better to have the IRS show up than the DOL when it comes to this subject matter.
All that said the Singing River financial debacle could keep an enterprising business writer busy for weeks as the ramifications of seeing yet another defined benefit pension plan crash and burn are literally legion. Here are a few things that come to mind:
- Most pension plans are required by law to be covered by some sort of fidelity bond? Was the Singing River Plan covered by a bond and if so will the plan trustee seek coverage for the prior malfeasance in plan administration?
- After 5 years of not being funded by the Hospital can the plan be salvaged from an actuary standpoint and if so what would the funding minimums look like to save the plan.
- Did the IRS/DOL annual tax filings disclose whether the Hospital was meeting its funding minimums?
- Did the Singing River Audit properly disclose the unfunded pension benefit liability as required by Generally Accepted Accounting Principles?
- Is the DOL currently investigating the Singing River plan in light of the media disclosures?
Of course part and parcel to this story is a potential audit failure by KPMG. The press reports essentially indicates the $88 million dollar problem centers on the Allowance for Doubtful Accounts. The problems associated with overstated receivables manifest themselves in a number of ways but are most often found in problems with liquidity and sure enough Karen Nelson at the Sun Herald tantalized us with exactly that albeit in a slightly different context:
Hospital system leaders were planning the retreat even as they were trying to scrape up money for cash on hand with a $3 million short-term bank loan.
And that brings me to the larger point because at times it has been suggested to the media that the problems with the Allowance for Doubtful Accounts was some sort of surprise to the hospital and its Board of Directors when the fact is the financial problems were well manifested and evidently being covered up. All Horne (the new CPA firm) did by booking the $88 million dollar adjustment was formalize the financial problems that were already well manifested in other ways.
And this brings me to KPMG because there is a little secret I just shared with the reporters covering this mess:
KPMG audits had 46% deficiency rate in PCAOB inspection http://t.co/U8VS6KoHa8 @NelsonNews_atSH @calee99 @AprilMHavens
— Slabbed New Media (@SLABBEDblog) November 13, 2014
And that dirty secret is actually worse than that:
Court OKs Suit Alleging KPMG Failed To Detect Fraud ~ Law360
There are more implications beyond what I have raised. The new management team recognizes this because, per a letter to employees obtained by Slabbed New Media, the gang pulls out all the stops going so far as to ask for prayers. Like I said there is enough here to keep an enterprising business reporter busy for weeks. Before this is done divine intervention may be required to keep shafted retirees from hanging a few current and former Hospital execs from the Singing River Bridge.
Stay tuned.
The Trustees, appointed by the Jackson County Board of Supervisors, should have been another level of checks and balance. But when one looks at the members, it seems few on this board could even read a balance sheet. So there is lots of blame to go around.
I have never been to the SRHS facilities as a patient or a even a visitor. Gulfport Memorial has received all of my business over the years. I did get a good chuckle from this morning’s Sunherald article about this matter. When they could not find anyone of the chicken littles to speak with from the SRHS board they contacted an old friend of mine, Myrtis Frank. She did a good job telling the facts of the matter from her perspective as a board member of another hospital system. I was shocked to see how closed door these boards are allowed to function.They operate like a secret society. The taxpayers and in this case the employees, both past and present, usually end up on the short end of the deal when there is zero transparency. What has happened with this retirement fund is just plain wrong. They can spend all kinds of money on other things, including the ongoing litigation to stop the construction of the new hospital facility by others at the Cedar Lake exit, while at the same time have quietly cheated the people who have worked so hard to make the hospital function.I hope this is resolved to the satisfaction of the people and not the incapable managers at the top.Once the facts are all reveal a total replacement of the board, who allowed for this to take place, is in order. They remind me of a very similar group of knuckleheads at the CMR.
Doug, help set the table. You mentioned Department of Labor. Since this is a government sponsored plan (I am assuming), do any of the DOL, ERISA, or Pension Benefit Guarantee Corporation rules even apply? My initial readings of these websites clearly reflect that government sponsored plans are excluded from their oversight. Without getting ahead of ourselves, do you have insight into the basic premise?
“Many sections of ERISA do apply to public-sector plans, including Title III and significant sections of Title II. Government plans are exempt from ERISA’s reporting, disclosure, and funding requirements (Title I) and plan termination insurance (Title IV). Although ERISA excluded public plans from several sections, public plans were required to comply with pre-ERISA requirements of the IRC. These pre-ERISA requirements form the bedrock of plan qualification rules on which both private- and public-sector plans have been shaped”
http://www.ebri.org/pdf/publications/books/fundamentals/fund39.pdf
After not being audited and having no open or accountable organization (so like DMR continues to operate), ole Stacey Pickering wants to jump on board and solve their problems. Where has he, the hospital Trustees, Jackson County Board of Supervisors and accountants employed by the hospital been since 2009?
When all is said and done, the employees and retirees will be screwed and those causing the shafting will be richer. All one has to do is ‘Remember DMR’!
Doug, as you may have guessed or known by now, one of our favorite names has already popped up on the “grapevine” in the Singing River Hospital” fiasco—JOE CLOYD!!! So, let’s all find something else to fret over ’cause our boy Stacey is gonna pursue this like he did DMR, which was embarrassing.
These elected officials just don’t seem to be able to remember who actually signs their paychecks.
Their arrogance is a worse epidemic than Ebola.
I find it interesting when inconsistencies hit the public eye, Pickering wants to jump all over it and act like a hero–Bustin’ the bad guys and saving the public from massive corruption. Of course, he is a true politician through and through so I really shouldn’t expect anything else. According to what was printed in the CL, he has been flapping his lips about McDaniel:
http://www.clarionledger.com/story/politicalledger/2014/11/12/mcdaniel-pickering-rumors/18923209/
What the public really needs to see is an audit on Pickering and his staff. Perhaps they can learn the insider secrets on how they actually conduct investigations and set up audit plans–if there even is one.
John and Not fooled….
You are right on target!!! Same players – another arm of the ConProfit!!! They are all still connected through different agencies including the DMR. Nothing has changed – new team at the DMR and same group with their hands out….McKay, Cloyd, Hewes, Bryant, Pickering friends and family plan, Fata$$ and on up the food chain. Our State has been hijacked by Washington big time crooks and it is past time for them to get up the road. Shame on all of the attorneys that represented these crooks. Shame on those of you who remain friends and companions of this trash. And I feel sorry for anyone who votes for them or anyone associated with this group because you have to be ignorant and down right stupid – Bless Your heart…
Eye – what I can not understand is how these crooks are continuing to raid the peoples’ coffers and n only getting their hands slapped!!! Local people are still friends with them, party and visit with them -even knowing what they have done. Has the world gone crazy??? Where are peoples’ morals? Do they not believe in God? OR read the Bible? In the past, I can remember wrongdoers being shunned by public communities and no one wanted to associate with them. We just prayed for the wrongdoers after they made restitutions and proved they were truly sorry for the error of their ways. Now it appears that people are all smiles and trying to fit right in with the cons instead of helping to fight the problem and right the wrongs they have done to others. And of course, the CONS always use the Bible and GOD when it suits their fancy to make everyone think they are doing the right thing. But they don’t fool a real Christian and certainly not GOD. You have to walk like a Christian to be one…talk means nothing. And believe me – that applies to the Singing River CO and DMR top dogs. It appears to me that most of the innocent are being victimized, used and abused, and the CONS are still smiling (see Joe Zeigler from DMR photo) like nothing ever happened…and it appears to be with the peoples’ blessings!!! Notice how his brother-in-law, Billy Hewes, has lain low and kept his name out of the headlines. There are plenty more coming in the headlines soon including more Hancock and Harrison, Jackson county, and even Pearl River county boys, But people keep voting for them. When are people going to wake up and run this bunch of crooks off of our Coast??? The same names are appearing over and over and the same crooks are inserted over major agencies on this Coast by political parasites. What will it take???? Wake up people!!!
I hope they don’t make GOD come down here. They will be very sorry. And hell is hot!! Very hot!! And forever! God Bless all of you that have been wronged by this band of political parasites. They are unskilled, arrogant, incompetant, and have no other way to make a living except to take what is not theirs from others who have worked for it.
Ms. Silkwooder,Just curious to know how are you linking Cloyd and the others to the Singing River Hospital scandal? Is Cloyd also a consultant there? Is he the guy that lives next door to one of the Walkers? So many scams going on it is hard to keep up with all of the players and which ones they are thought to be involved in. Ebola might be easier to cure than political corruption. Keep up the good work.Thanks
“notfooled November 14, 2014 at 5:15 pm Doug, as you may have guessed or known by now, one of our favorite names has already popped up on the “grapevine” in the Singing River Hospital” fiasco—JOE CLOYD!!! So, let’s all find something else to fret over ’cause our boy Stacey is gonna pursue this like he did DMR, which was embarrassing. These elected officials just don’t seem to be able to remember who actually signs their paychecks. Their arrogance is a worse epidemic than Ebola. ”
Mr. Gordon – As you can see from this quote above, Joey Cloyd has popped up again. I am not sure what role he plays in this but it appears that everything Jackson County is associated with the Walkers, McKay, Harris, Maxwell, Palazzo, and Cloyd conprofit clan. They have slid over into Harrison and Hancock counties too, but my belief is that it all originated in Ocean Springs. I can not say how many Joe Cloyds live in this area, but I believe this one to be the same one that lives next to Scott Walker in Ocean Springs. (Speaking of clans, are you of the Union, MS family?) They are good people.
Ms. Silkwooder, my family is from Memphis and they have been there for 5 generations.Thank you for asking. Now that the Ms.State Auditor is involved I feel certain things will get worst for the people who have contributed to the SRHS retirement pension plan.He will roll out his “dear friends” program for the past CEO, Chris Anderson, who I have been told is an acquaintance of his and now is just down the street from Pickering’s Jackson office. I think he will, after much ado and many press conferences, seek reimbursement from and indictment of an inventory clerk, janitor and secretary.In his press release he will announce the liquidation and sale of the SRHS to a for profit entity due to the illegal activity of these three. End of story. Now on to the next scandal.Please keep sticking you finger in the eye of these people who have broken the public’s trust. They deserve to be exposed for who they are.
When Gov. Haley Barbour made appointments of certain parties for the rebuilding of the Coast after Katrina, a man by the name of Barksdale was the Chairman, and there were sub-committees formed under his group. Chris Anderson led the committee for Health and Human Services, and the Gov. appointed Joe Cloyd to see that all of the committees worked well and got what they needed for Health and Human Services. There is the beginning of his connection to Singing River, and no telling where it leads after that, but he is well connected with the “powers that be” in Jackson, and probably knows a lot. But, Stacey will find some poor little comptroller or bookkeeper to hang it on, and brag about it at the Neshoba County Fair next year during his campaign for re-election.
I was just thinking the other day–wonder how Stacey feels about Jennifer Schoelgel getting re-elected to her position on the Chancery Bench by such a large margin. He’ll still have her to deal with–thank Goodness. Somebody has to try to keep him straight.
Thanks for the info NotFooled. I am so grateful that Judge Schloegel was reelected!!! They won’t run over her. She knows them for what they are – arrogant, spoiled, insecure frat boys. They have their own little “club” including our own legislators, so be sure to watch out who associates with who and vote them out in the upcoming election.
The DMR is using a new tactic that someone needs to investigate. They have done away with the old purchasing system and are now using something that is supposedly coming from Jackson. It is called “Magic”.
Con’t – I guess this Magic will allow them to magically hide the money transactions as they pass through the proper hands…ahem….I mean channels. Someone needs to investigate this because this is of Frontier’s doings (ie.. Joe Cloyd, etc.). Appreciate any help on this.
Other investigtation finds that the employees still there are scared silly. They are not allowed to associate with the employees that Jamie fired for no reason. He is also passing out “favors” including job titles, special training for “quiet” individuals, and he has put his mother’s long time friend’s son in a position down in fisheries to “watch out for traitors”. Also installed are several old Walker cronies from the Gulf Coast Research Lab.
He is paying for college degrees, has passed out raises, and other things to keep the employees quiet. Not much different than Joe Zeigler and his blackmailing tactics. Guess he will have a big party at his house this Christmas since he is under house arrest. Guess old Billy Boy and the rest of the ConProfits will be partying there this year.
Okay Thad Cochran – you have been re-elected. Straighten out this mess a do what you were elected to do. You have enough experience to know how to handle these crooks. Get with the program. It is evident that Palazzo and the others plan on doing nothing. How about you Bennie Thompson?? You are a long-serving legislator! Get on the stick! Bring in Washington! Stop this pilfering of the peoples’ money!!!
Ooops.
Singing River told employees pension funded when it wasn’t
Told in writing apparently.
PASCAGOULA — Singing River Health System sent statements in 2009, 2010 and 2011 to each employee showing how much the system paid into their individual retirement, with colorful pie charts that showed millions invested overall in the pension plan.
It turns out the health system contributed no money to the pension plan after 2009, SRHS executives now acknowledge.
Is that spelled LIEability or liability?