After much community protest over the proposed conversion of the New Haven Savings Bank, or NHSB, from a depositors-owned to a stockholders-owned bank, opponents have turned to the courts.
On Jan. 12, depositors of the NHSB, filed a class action complaint for an injunction against the conversion. Included in the complaint is a request for compensatory damages.
Community criticism has centered on the fact the NHSB Board of Directors consists of many high-ranking officials at Yale-New Haven Hospital.
NHSB CEO Peyton Patterson, is a board member at Yale-New Haven. Joe Zaccagnino, President and CEO of the hospital, serves on the NHSB board, as do Yale-New Haven board members Julia McNamara, President of Albertus Magnus College, and Nat Woodson, CEO of United Illuminating.
The Service Employees International Union District 1199 has also opposed the hospital on various community issues. Yale-New Haven is accused of excessively aggressive debt collection practices, which include placing liens against patients’ homes when they are unable to pay. The hospital is also accused of failing to notify patients about “free-bed funds” which help poor patients with their medical expenses.
The SEIU represents 140 workers at the hospital. Workers have been without contract since late August, due to many failed negotiation attempts, and both institutions have filed legal actions against one another for various union-related issues.
Bill Meyerson, spokesman for SEIU, said because the leaders of the bank and the hospital are the same, the union is involved to protect the interest of community members.
“The same group of individuals that are denying depositors a vote on what happens to their bank — denying them a right of the profits and surpluses of the bank through this conversion plan — sit on the hospital board of trustees, and are making the decisions about suing patients with inadequate insurance for the so-called crime of being sick and uninsured,” Meyerson said. “In that sense, it’s a related issue — it’s about the accountability of a select powerful group who run vital institutions in this community.”
Meyerson also said the union supports the suit because many members of NHSB also belong to the union. If a judge deems the case worthy of class action, many union members will benefit.
“Two of the three lead plaintiffs are union members,” Meyerson said. “The union is helping out on this to protect the interest of our members who also happen to be depositors at the bank.”
On Jan. 13, NHSB filed an amendment to its conversion proposal to the state Department of Banking limiting the original stock-based compensation plan to the board of directors.
“Despite our efforts to clarify that these plans involved standard provisions and were subject to shareholder approval, this seemed to be an emotional issue to some in the community, and withdrawing them from our conversion application will hopefully let all our constituencies see more clearly the merits of the conversion itself,” bank spokesperson Paul McCraven said.
McCraven said no future amendments were planned at the moment.
Regarding the complaint filed by depositors, McCraven said the bank has not yet reviewed legal material from the depositors.
“We really can’t speculate on what the intentions of the plaintiffs are,” he said.
William Bloss, the attorney representing the plaintiffs, said it may be weeks before a decision is made regarding the injunction, and even longer before a court decides if the conversion itself will be allowed.
“We’re going to ask for a hearing on a preliminary injunction sometime in the next month or two,” Bloss said. “Regardless of what happens — the larger issue is still before the court: is this [conversion] going to happen.”