Guam Retirement Fund Could Sue Hospital For $4 Million

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Outstanding retirement contributions continue to grow

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, March 1, 2016) – Payments to the Government of Guam Retirement Fund that are consistently past due have prompted the fund’s Board of Trustees to seek legal action against the island’s public hospital, which owes more than $4 million in retirement contributions.

Board Chairman Joe T. San Agustin said the board plans to file a writ of mandamus with the court in the hopes that it can compel the Guam Memorial Hospital Authority to fulfill its obligation of paying off its debt. A writ of mandamus is basically a court order demanding a government entity to perform its duties correctly.

The board began discussing possibly pursuing legal action against the hospital in late January when GMH’s debt was still less than $3 million and behind by five pay periods for both defined contribution and defined benefit plans, news file state.

However, the situation has gotten so dire that the Retirement Fund has begun exploring the option of possibly ceasing payments to retirees as well as not accepting applications for any government of Guam employee who wants to retire, said Retirement Fund Director Paula Blas.

"It doesn’t mean that’s going to happen right away," she said. "That’s what they’ve instructed people to do — was just explore those options."

The late payments have already prevented some of GMH’s employees from being able to file for retirement, as GovGuam employees are unable to do so while their respective department or agency is behind on retirement contributions.

Noting the issue has been an ongoing concern, Oyaol Ngirairikl, Adelup’s communications director, said the problem won’t end until GMH’s finances are stabilized. She also said the adoption of new, increased fees should help the hospital’s revenue collections.

"The GMHA administration is doing what we can locally, including improving billing systems and strengthening policies — both of which will improve collections," Ngirairikl said. "There are some new fees in place that are a step towards being able to bill customers for the actual cost of service."

The hospital’s current outstanding obligations go beyond payments to the Retirement Fund, as GMH also owes payments to the Guam Power Authority, Guam Waterworks Authority and several other vendors. Last month, the hospital was facing a power and water shutoff for not paying its utility bills on time, but it was able to make a last-minute payment of $800,000 to the utility agencies, preventing a shutdown.

"The hospital has payment plans to pay their past-due utility bills with GWA and GPA," Ngirairikl said.

To keep up with payments to retirees, San Agustin said the Retirement Fund has been liquidating its investments.

"It’s now approaching the draw down; we have to liquidate investments to pay ongoing payments," San Agustin said. "If the action continues to deteriorate there won’t be any more money for the rest of us.

"We have to stop this internal bleeding," he added. "That means that if this continues, let’s find out from what legal action to stop further deterioration."

‘Personally liable’

San Agustin stressed that the Retirement Fund is at stake when it comes to not paying retirees their monthly allotments.

"We are personally liable if we don’t do something about it," he said. "We could be sued ... each one of us on the Board of Trustees is personally liable."

In previous instances, San Agustin recalled, the governor’s administration made good on the hospital’s debt by floating a bond.

"Legal action is something no one wants to pay," San Agustin said, adding: "In the past the government has made good on it, but now we don’t see any action from the government as to what they’re going to do."

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