The Citrus County Hospital Board is making progress in recouping some of the millions of dollars in pension fund losses it claims were lost due to bad financial advice from Aon Hewitt Investment Consulting.
That was the message this week from the board’s lawyer Bill Grant, as he told his board trustees that negotiations were continuing with many of the peripheral details already hammered out, leaving both sides discussing a financial settlement for the lost money.
Both sides were zeroing in on a final settlement figure last week Grant said, but failed to reach a conclusion.
“The mediation went very well. We are currently at an impasse, but we are working through it,” Grant said. “The lawyers continue to talk, but the horizon looks promising."
The hospital board’s consulting lawyers in the Aon Hewitt case told the hospital board that their expert witness estimated that Aon caused a loss of as much as $12 million to the fund when Aon failed to monitor its own proprietary investments for the Citrus Memorial Hospital pension fund and failed to liquidate the investments when the cash was needed for the lease of the facility.
At the head of the federal lawsuit, which is now in its second year, is the Foundation Resolution Corp., which is the remains of the organization that operated Citrus Memorial Hospital before it was leased by the hospital board to Hospital Corporation of America
The hospital board owns the hospital on behalf of the public. The hospital board had to loan the FRC $17.5 million to wind down the pension to ensure all the hospital’s employees were paid after the loss. Grant said the hospital board has oversight of the issues involved, but not control, but does have final approval to any settlements.
Hospital board lawyers’ expert witness is Kent Smetters, who is the Boettner chair professor at the University of Pennsylvania’s Wharton School and a faculty research fellow at the National Bureau of Economic Research.
Grant told the Chronicle that the hospital board racked up as much as $1.9 million in legal fees for this case.
On Feb. 10, the FRC and Aon Hewitt are again scheduled to go to court and make oral arguments involving the case. The case is scheduled to go to trial in April. The hospital board and Aon Hewitt are expected to reach a settlement before April but could be for less than the lost $12 million.
If the FRC recoups the money from Aon, it will hand that money over to the hospital board to repay the board’s loan to the FRC. The board would in turn give the money to the charitable foundation to dispense to local charities and health-related programs
Meanwhile, Grant told the trustees during a regularly scheduled meeting Monday that he is also working on board-related issues as the trustees look to sunset the board and hand off its functions to another government entity.
That includes freeing up more than $20 million in escrow as part of the lease agreement with HCA. When the hospital was leased to HCA it had many financial problems, so HCA required the hospital board to set money aside in case of unforeseen expenses. HCA has to agree before the hospital board can get the money.