Delaware secures $950M settlement from Nemours Foundation over du Pont trust

Why Should Delaware Care?
For decades, a du Pont family trust has bankrolled Delaware’s only pediatric hospital. In addition, Delaware attorneys general have battled in court with managers of that family trust challenging whether they properly invested in Delawareans, as requested by the late duPont. 

Delaware is set to receive nearly $1 billion over the next 11 years from a trust tied to one of the state’s most prominent and wealthy businessmen. 

Delaware Attorney General Kathy Jennings announced on Friday that her office secured a $950 million settlement with the Nemours Foundation and the Alfred I. duPont Charitable Trust following decades of litigation that spanned seven attorneys general. 

At the center of the settlement are claims the foundation had improperly spent a charitable trust left behind by one of Delaware’s most prominent businessmen – Alfred I. du Pont. In his will, du Pont requested the remainder of his wealth go to supporting children and elderly couples “who are residents of Delaware.”

And while the trust has for decades helped to bankroll Delaware’s sole pediatric hospital, Wilmington’s Nemours Children’s Health, generations of Delaware attorneys general also have challenged trustees of du Pont’s will, saying they spent large chunks of the funds on ventures outside of Delaware.

In 1991, the nonprofit health system acquired a children’s hospital in Jacksonville, Fla., which was where du Pont had kept a second home.

The settlement sets aside “at least $237.5 million” for Delaware’s Nemours campus, and state officials said those funds won’t be used for operating budgets. It also ties up a nearly 50-year legal fight over the management of du Pont’s trust, and its impact in Delaware.

At a press conference on Friday, Jennings said the settlement was not about her office or any other AG who may have sought to bring funds into the state. Instead, she said it has “always been about the future health of every child in the state of Delaware.”

“The funds secured under this settlement could change the future, and will change the future for Delaware’s kids,” she said. 

In a statement, the Nemours Foundation said it would continue to invest in Delaware’s children, and hopes the 11-year investment will support a “broader network of organizations dedicated to children’s health and well-being.” 

A spokesperson for the Alfred I. duPont Charitable Trust said the funds set aside for Nemours would go to supporting children, as well as “new, Delaware-based initiatives recommended by Nemours to the directors of the fund.”

Gov. Matt Meyer also said in an emailed statement he was appreciative of the work of Jennings and the Delaware Department of Justice for bringing the funds to the state.

What does the settlement say? 

The $950 million award would be dedicated primarily to funding initiatives to improve the health of children in Delaware. Neither Jennings nor spokespeople for Nemours and the trust outlined any immediate spending priorities for the settlement funds on Friday other than that they would go toward supporting children. 

However, Jennings and the DOJ outlined how the funds will be governed over the next decade. 

They will be managed by a five-member committee, three of whom would be selected by the du Pont trust, another would be selected by the governor, and a fifth independent member would be selected by the other four.

During a press conference on Friday, Owen Lefkon, who leads the Fraud and Consumer Protection Division at the DOJ, said it would not be a public body since it’s a private trust.  

Additionally, he said the committee would be responsible for establishing their own grantmaking criteria for how funds would be awarded to different organizations across the state. 

Jennings added that the funds would have to be spent on the health of children within the state, and the uses can be broad. 

“They can be capital grants for buildings. They can be grants for specific programs. They can be new programs, existing programs. But the experts are going to decide that,” Jennings said. 

A copy of the settlement agreement said the funds would be able to support capital expenses, education, as well as research programs that support Delaware residents. 

As for the $237.5 million set aside for Nemours, those funds cannot supplant existing operating costs for the hospital in Wilmington, the settlement said. There are some exceptions that say funds can support “strategic” programs or investments that are unlikely to be profitable for the hospital. 

History of the settlement

Delaware first challenged the du Pont trust in 1979, decades after his death in 1935. 

He lived in Delaware for most of his life, before moving to Florida in his twilight years with his wife. When duPont died, he specified in his will that he wished to support the health of Delaware’s youth and elderly with the remainder of his wealth. 

Shortly thereafter, the Nemours Foundation was established with funds from his trust and domiciled in Florida. 

Along with operating the children’s hospital in Wilmington, the Nemours Foundation also doles out money to its Florida hospitals, as well as its New Jersey and Pennsylvania health clinics. 

Once du Pont’s wife died in 1970, the Nemours Foundation began to receive larger payments from the trust. What followed were decades of legal challenges by Delaware leaders, who had sought a greater share of his will. 

Delaware attorneys general homed in on specific language in du Pont’s will that requested support for children and the elderly support “residents of Delaware.” 

The first lawsuit in 1979 was settled a year later, requiring the Nemours Foundation to spend no less than 50% of the funds it received annually from the trust on its Delaware operations. The $950 million settlement vacates that agreement. 

Former Attorney General Matt Denn filed suit against Nemours and the trustees in 2017, challenging spending by the foundation and the trust. The complaint claimed Nemours used large swaths of trust funding to support its Florida hospital that violated the 50% stipulation settled in previous decades.

Denn and his Department of Justice litigated the case until 2019, until Jennings was elected 2019 and she took over. In an interview on Friday, Denn said he never thought the issue would be settled in his lifetime, and that he was grateful to Jennings and her team for securing the funds. 

In recent years, an appeals court in Florida ruled that Delaware’s attorney general had the authority to challenge the trust on behalf of Delawareans the state believed had been shorted by investments made by the trustees. 

The case had previously hit a bump, when a trial court ruled the Delaware Attorney General did not have the standing to pursue the trust. Jennings said with the appeals court win, her team had positioned itself well for a trial. 

“In the wake of an impending trial date and outstanding lawyering on our side, we were able to get where we needed to be,” she said.