Lawsuit now a sideshow in Memorial Hospital lease election

A lawsuit has been filed by the City of Colorado Springs in El Paso County District Court. It’s over millions of Public Employees Retirement Association or PERA money. PERA believes the city should pay up its share that it put in for Memorial Hospital workers covered by the plan. City legal experts believe if the University of Colorado Health lease is approved by voters next week, then the city isn’t obligated to pay Memorial Hospital workers who would no longer be with the city since the hospital would be run by University of Colorado Health.

Here is an email sent to me by City Attorney Chris Melcher:

“The City filed a request in El Paso County District Court on August 15, 2012 asking the court to issue a ruling that, if the voters approve the proposed Lease of the operations of Memorial Health System to University of Colorado Health, the City will not have any liability or obligation to make a payment to PERA regarding the employees that would be transferring to new jobs with UCH. The court action, called a declaratory judgment action, was filed in response to a demand letter sent by PERA to the City on August 3, stating that PERA intended to sue the City on August 17, 2012 unless the City agreed to PERA’s demands for a large exit payment from PERA. The City has been in conversations with PERA for nearly 3 years on issues related to a proposed MHS transition, and had repeatedly requested that PERA wait to resolve these issues until after the voters first decide whether to approve the UCH partnership. PERA refused, and the City was forced to forward to protect the rights of the community.

“We have consistently said over the past many months that the City believes that it has no obligation to PERA in the event the voters approve the transition of Memorial to the University of Colorado Health system, and the Memorial employees then become UCH employees. This is no different than countless situations in the past when individual public employees, groups of public employees, or even entire departments of employees have left employment with the City, and have thereby left the PERA system. PERA has never before requested a payment when City employees have transitioned to new careers or opportunities, and there is no valid reason why a payment should be required now from PERA if the voters approve the Memorial transition.

We are confident the courts will agree with the City’s position, if the Memorial transition is approved by the voters. We repeatedly asked PERA to wait until after the Memorial vote to discuss this dispute, in order to first see whether the voters would approve the UCH partnership. PERA refused to do that, and threatened to file suit against the City before the vote. PERA’s position left the City no choice but begin the legal process before the vote, and file a request with the court for a preliminary determination on this issue, even though a final answer will be months if not years away. We look forward to hearing the voters’ wishes next week on the proposed lease of Memorial Health System. If the community approves a new era for Memorial with the UCH system, we will move forward promptly on all the issues associated with a transition, including a vigorous defense of our community’s rights on the PERA issue. We do not expect the legal process on the PERA issue to slow down in any way the transition of Memorial Health System to a lease arrangement with UCH if the voters approve the ballot measure next Tuesday.”

PERA Communications Director, Katie Kaufmanis responded in an email about her group’s contention over the money. Here’s that email:

“PERA believes that a judicial resolution of this issue will be necessary. PERA anticipates that we will be filing a counterclaim in this matter because the full amount is due and payable. Previous estimates of the cost of these earned and promised retirements are in the range of what we expect the liabilities to be.”