Do we have a true settlement or a glorified cramdown on the SRHS pension crisis? Before I get to a few numbers and highlight the court case that I think ultimately controls the proper resolution of this disaster, we need to take a look at the person that Special Master Britt Singletary tasked about a month ago with overseeing the pension plan go forward, former Department of Public Safety Director Steve Simpson.
After nearly a year long fight to get the pension benefits they were promised, Tuesday a judge told Singing River Health System retirees they should sleep restfully from now on. Special Master Britt Singletary appointed an independent trustee, former Circuit Court Judge Steve Simpson, to oversee the pension. And he said an announcement of a settlement deal between the health system and retirees is close at hand.
“What we believe was the root of a lot of the problem was there was nobody on behalf of the pension holders or the pension members to look out for their interest alone,” said Jim Reeves, who represents some of the retirees. “Now we have that person in place who is a watchdog, so to speak, for the pension holders.”
April Havens gave us even more background on Simpson:
Simpson, a Gulfport attorney who focuses on civil litigation, defense, governmental affairs and lobbying, premises liability defense, personal injury defense and criminal defense, is also a former Mississippi Public Safety Commission member.
The decision to put Simpson at the helm of the pension plan was made Tuesday during a hearing before Special Master Britt Singletary in Pascagoula.
“Singing River Health System and certain plaintiff’s attorneys have agreed to an order governing the administration of the retirement plan and trust,” SRHS attorney Brett Williams said.
Between the two accounts, anyone that did not previously know Mr. Simpson now understand that his background is impressive:
- A lawyer that “focuses on civil litigation, defense, governmental affairs and lobbying, premises liability defense, personal injury defense and criminal defense”
- Appointed by former Governor Haley Barbour as head of the Mississippi Department of Public Safety
- A former Harrison County Circuit Court Judge
I am just guessing but to the extent litigation and in particular agreed orders inherently involves a negotiating process there is a good chance Mr. Simpson was a compromise choice. The public may never know the answer to the how the parties settled on Simpson but to me the real question is whether or not he is qualified to be a pension trustee. My personal opinion is not and by implication I think it is more likely than not that once again the cost of the bad decision making will be borne down the line by the SRHS pension plan participants.
It would not be fair for me to leave it at that but before I lay out why I think Mr. Simpson is not the right choice, what do the folks over at SRHS Watch think? That interactive website is heavily trafficked by retirees so the commentary is going to reflect some of what the group as a whole is thinking. The analysis is brutal but I think it is also reflective of a growing frustration among the retirees that has reached the boiling point:
Of course he isn’t qualified to be the trustee the SRHS pension.
He is just another fatfuck trough-snarfer who is “properly acquainted” with the assholes who are ramrodding/overseeing this fiasco. If he were actually qualified, he wouldn’t get near this mess. An honest person with real talent can easily make 7 figures a year managing 9 figures. In other words, even a piddly $100 mil pension (corpus) can easily support a $1, even a $2-3, mil a year manager IF the manager is competent, and it is all pay for performance, percentage of return. But here, there simply isn’t the reasonable chance of honest, reasonable reward for the time-money-value risk versus the earnings and fiduciary obligations for a REALLY qualified person to take the risk. Why should a person who can perform take the risk? It isn’t a matter of greed on the part of potential qualified managers, it is a matter of the financial return versus the overall mess and the potential civil and criminal liability, even if they didn’t do anything wrong. It is all downside.
Mr. Simpson’s prior political connections are bothersome. The fact Slabbed has been told by multiple sources over a period of this past year that the construction of the Highway Patrol Substation on Highway 67 has been looked at by the FBI as part of a larger public corruption investigation is bothersome given Mr. Simpson’s former employment running DPS. But if you leave all that aside and assume the people that cut the deal to bring Mr. Simpson into the equation have the best of intentions the appointment is still problematic in my professional opinion.
Lifers here know that I am very conscientious about not mixing my business lines in the day job as a CPA that pays the bills and the second job running this media company. My experiences practicing as a licensed CPA absolutely colors what everyone sees on these pages but the prime directive means there are many times I can’t share my insights. I construe the rule strictly to be cautious.
I’m proud to be associated with some very fine entities that pay my firm big money for our expertise and on a certain level it does not feel right to give away for free on these pages the knowledge others pay big money to obtain. I had to struggle with that last year when all hell was breaking loose with the SRHS pension meltdown, accompanying audit failure and management perpetrated fraud. On November 13, 2014 I resolved that dilemma with Slabbed’s first post on the topic. It was a big step and one that was taken with a great deal of forethought because on the day I decided that Slabbed would jump in, sitting across the table from me was an auditor examining the records of one of my clients, an entity actually owned by a qualified ERISA pension plan. I’ll brag on myself and say there is not another CPA in this state in public practice that has the depth of both administrative and operational knowledge of complex ERISA qualified pension plans than I. My name is listed on a precedent setting income tax dispute involving Mississippi taxation of this unique financial vehicle and it wasn’t as the loser. I’ve already disclosed too much and have passed my comfort level but the day I decided to cover the SRHS pension meltdow on Slabbed was a bad day for the people trying to shaft the SRHS retirees.
The bottom line and the reason for the above background is the fact that I work with a Professional Pension Plan Trustee and have done so for over 11 years. To paraphrase the late Lloyd Bentsen, Mr. Simpson I knew professional ERISA Fiduciary, I’ve worked closely with Professional ERISA Fiduciary and you sir, are not a professional ERISA Fiduciary.
Notice Mr. Simpson’s legal background because I missed the part where it said he had an ERISA background. As a practicing attorney Mr. Simpson would certainly understand the legal concepts behind his fiduciary duty to the plan participants which is an absolute prerequisite for the job the previous interest conflicted trustees lacked. While you do not have to be a professional money manager or investment adviser at a minimum a professional trustee would have a keen understanding of how the financial markets operate including a broad range of specific type of investments. The trustee I am most familiar has a banking background which included providing both fiduciary services and investment banking along with public company management experience. Professional trustees have a unique combination of skill sets that Mr. Simpson lacks. Given there are multiple qualified companies that provide this unique niche professional service on a professional level I was shocked to hear of Mr. Simpson’s appointment. Then I remembered I was in Mississippi.
A Pension Fiduciary charged with overseeing the managing of pension plan assets should demonstrate a proficiency in actually managing money and from that standpoint the following is highly disturbing:
SRHS Watch is working on a thorough profile of newly appointed Special Fiduciary Steve Simpson. Simpson is a Gulfport attorney who previously ran for attorney general. During his run for office, reporting by the Clarion Ledger revealed that nearly $5,760 in property taxes had gone unpaid on Simpson’s $378,000 home.
Simpson explained that he re-financed the home and was unaware that he would be responsible for paying the tax collector and was hit with a surprise bill.
But that is not as disturbing as learning that online Harrison County Tax Records indicate Mr. Simpson’s residence was sold at tax sale for nonpayment of his 2014 property taxes:
My professional experience being part of a team that actually hired a professional ERISA Trustee is it all beings with Due Diligence. That means identifying and interviewing multiple candidates. It’s a small universe involving a niche profession so the identifying of candidates should be done via nationwide search. The interview process is to find out who is the right fit. After hiring the Fiduciary the next step is to get a proper lawyer and not for the fiduciary because he already has one of the best ERISA lawyers in the country from any number of law firms working for him. It is the employer that needs the ERISA counsel because when an entity deals with the challenges of managing a business for the benefit of others, the intersection of the Fiduciary, ERISA and prudent management practice dictates management should have someone knowledgeable of ERISA to consult before making major business decisions. Far as I can tell the Singing River Health System has never had such a lawyer on retainer and it shows in the amateurish way the Singing River Defined Benefit Plan was managed. Of course it was a lawyer from the same firm that oversaw Hospiatl management wearing two hats as plan trustees that was one of the parties that brought the SRHS Pension Plan Simpson. It is a sign to me that SRHS lawyers Dogan and Wilkinson have learned nothing from this process except how to generate more big bills for legal services and that brings us to part two.
If Jim Reeves is going to attempt to cram down a settlement on the retirees, my opinion is that he owes it to them to cut the best deal he possibly can and so far I think what’s on the table currently is woefully short of being a fair settlement. The reasons for that come next. Stay tuned.