Thursday, September 18, 2014

PERA settlement pending?

Posted By on Thu, Sep 18, 2014 at 5:27 PM

click to enlarge Then City Attorney Chris Melcher inks the UCH deal for Memorial. How much will the city have to forfeit now? - FILE PHOTO
  • File photo
  • Then City Attorney Chris Melcher inks the UCH deal for Memorial. How much will the city have to forfeit now?
The Colorado Springs Business Journal is reporting a settlement is imminent in the city's lawsuit with the Public Employees Retirement Association.

We're written about this topic numerous times, most recently last month. The lawsuit started in 2012 after the city leased Memorial Health System to the University of Colorado Health under a 40-year agreement that paid the city an initial $259 million up front, plus market-sharing payments per year that amount to roughly $5.6 million annually.

UCH specified that $185 million of the up-front payment was designated for PERA, because Memorial's employees would leave the PERA system when they converted to the UCH system. The city, under the advice of former city attorney Chris Melcher, claimed it owed PERA nothing. Melcher left the city last January. Hogan Lovells law firm has represented the city in the case.

Meantime, the city has lost several key rulings in the case, notably one that said the city erred in not following the process proscribed by law to have the Memorial employees leave PERA.
Now, after nearly two years of litigation, the Business Journal suggests a settlement is pending. PERA has said the city owes at least $190 million, and if interest charges are tacked on, that sum would easily exceed $200 million.

The city already has been spending its lease money by funding another lawsuit settlement arising out of advice provided to the city by Melcher and an outside attorney about the Memorial deal, and related costs, such as some $1.6 million for attorneys and worker compensation claims of employees that predated the lease.

The city's idea is to use proceeds from the Memorial lease to fund the Colorado Springs Health Foundation, which reported only $16.1 million as of Aug. 31, the most recent figure available, despite getting monthly payments for nearly two years from UCH.

The city is holding the original $259 million in escrow until the lawsuit is over.

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