The union representing more than 200,000 Canadian public sector employees says the Public Sector Pension Investment Board’s investment in a for-profit, long-term care provider is inconsistent with its fiduciary and legal obligations to plan members.
The Public Service Alliance of Canada is calling on the PSP to end its investment in Revera Inc., its wholly owned subsidiary, and to transfer its management and control to provincial health authorities across Canada. “We’ve raised these issues in the past on several occasions, but we’ve got nothing but lip service back,” says James Infantino, pensions and disability insurance officer at the PSAC. “We think the way they’ve managed these facilities put the [pension] plan in a situation of undue risk and that is contrary to its obligations toward plan members.”
Revera, which operates long-term care and retirement homes across the country, is the target of a $50-million class action lawsuit launched by families of coronavirus victims in the company’s Ontario facilities. The families allege the facilities lack proper sanitation and testing protocols to prevent the spread of the virus.
In a May 11 letter to Neil Cunningham, president and chief executive officer at the PSP, Chris Aylward, the PSAC’s national president, wrote that the union suspects the lawsuit will be the first of many. “The PSAC has long warned PSP Investments that the continuation of business practices without addressing the concerns of our organization would not only be detrimental to the residents and employees of Revera Inc. but could also pose long-term consequences for the contributors and beneficiaries of the Federal Public Service Pension Plan.”
The PSAC attempted to engage with the PSP about Revera in July 2012, when a labour dispute at one of the company’s Edmonton retirement residences raised concerns that the organization was paying staff “significantly below industry standards.” It also contacted the PSP in November 2018 after CTV W5 aired an investigation into class-action lawsuits against long-term care facility operators, including Revera, that alleged mistreatment and avoidable deaths in the facilities.
“We got the same non-response [both times] and now it’s culminated in this,” says Infantino. When the PSP acquired Revera in 2007, it took the company private, so it’s unclear how much the investment is worth, he adds.
In a May 21 reply to Aylward, Cunningham wrote that the PSP insists partners operating the assets it invests in “use best industry practices in their operations, including, but certainly not limited to, health and safety concerns for the workers and all those who access our facilities. This is especially true for residents and staff of Revera-operated long-term care homes and other facilities.”
Cunningham said the PSP implemented a public company-style governance structure at Revera when it was acquired, including an autonomous board of directors with two former medical professionals. The pandemic has highlighted structural issues in the long-term care system, he added, but Revera is committed to being part of a future solution.
“I would caution you against relying on media reports of potential litigation as a means of risk assessment of the PSP’s investments or as justification for a divestiture decision,” he wrote. “PSP has a very robust risk management process and I can assure you that this investment has been subjected to appropriate scrutiny and does not in our view represent undue risk for the Federal Public Service Pension Plan.”