Wednesday, June 18, 2014

City on losing end of rulings in PERA case

Posted By on Wed, Jun 18, 2014 at 3:10 PM

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Facing interest charges of $1.5 million per month alone, the city continues to battle against paying what's due to the Public Employees Retirement Association for Memorial Hospital employees who left PERA when the city leased Memorial in 2012.

Now, the courts again have ruled against the city, denying its ability to pursue what's called an interlocutory appeal. That's an appeal mid-stream in a lawsuit before it's settled by a trial. The city had hoped to prevail in its appeal of a previous district court ruling, by retired District Judge Harlan Bockman on Feb. 10, that found the city should have followed the statutory process of opting out of PERA instead of just pull the plug as the city did. The city is free to appeal whatever judgment results from the trial, set for October.

That process includes a vote of employees and an application to the PERA board.

The city leased the hospital on Oct. 1, 2012, to University of Colorado Health. The city claims it owes PERA nothing for Memorial employees' retirement benefits after they were switched to UCH, even though UCH gave the city $185 million specifically for the PERA obligation. UCH's total paid to the city for the lease came to $259 million. which is to be used for a public health purpose through a foundation. The city also receives yearly payments of about $5 million.

PERA contended the city owes roughly $190 million, a figure that PERA says is growing due to accumulating interest of about $1.5 million per month.

The figure today is $215 million, says PERA attorney Adam Franklin. On top of that, through January, the city had paid Hogan Lovells law firm $1.5 million to litigate the PERA case. 

About two weeks ago, PERA got another favorable ruling from Bockman, who sided with PERA by saying it can rely on common law theories. Franklin says in an interview, "The significance of that is, we believe that may entitled us to damages beyond what the statute would allow us to recover. Bottom line: We think that ruling may entitle us to additional damages."

"The City continues to try and shift their financial obligation to other local governments and their employees across Colorado," Franklin said in a statement. "At the end of the day this is about making sure that PERA members and beneficiaries receive the benefits they have earned. We are pleased with the recent rulings by the district court which will ensure that this matter is not delayed even further while substantial interest continues to accrue."

Emails to the city didn't draw an immediate response; the city in the past has refused to discuss publicly pending litigation.

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