Updated May 6 with information from the county’s 10:30 a.m. special meeting.
Cascade County has joined with Lewis and Clark County in a lawsuit filed by the Montana Association of Counties against the Montana Public Employees’ Retirement Administration over unfunded pension liabilities from health agency splits from the counties.
Last year, PureView, a federally qualified health clinic, split from Lewis and Clark County, taking about 60 employees with it. When those 60 employees left the MPERA retirement system, it created a funding lapse, according to MPERA, which sent a letter to the county indicating it owed about $5 million for the withdrawal.
Cascade County objecting to $3.1 million pension liability over Alluvion split
Last year, Alluvion Health, also a federally qualified health clinic, split from Cascade County, taking about 60 employees with it, according to the lawsuit.
In a November letter to Cascade County Commissioners, MPERA Executive Director Dore Schwinden wrote that the county owed about $3.125 million for the loss of those employees in the system.
Both counties disputed those penalties.
In January, Montana Public Employees’ Retirement Board filed a petition at the Montana Supreme Court to take up the issue directly, but the court denied the petition on April 21 saying it needed to be litigated in the lower courts first.
Two lawsuits related to this issue have already been filed in Lewis and Clark District Court and on May 6, Cascade County Commissioners held a special meeting to direct the county attorney to file a civil suit against MPERA and MPERB.
Commissioner Jane Weber said the county didn’t received information from MPERA from January, when Alluvion formally split, until November when it received the letter.
“I was rather shocked to get a letter that late in the game,” Weber said.
Commissioner Joe Briggs said Alluvion and the county had requested to stay in the MPERA system but was rejected, but then penalized the county for the separated employees.
“It’s the kind of stuff bad soap operas are made of,” Briggs said.
County, Alluvion in discussions over missing billing funds, back rent
The commissioners also approved during the May 6 meeting a joint prosecution and common interest agreement with the Montana Association of Counties and Lewis and Clark County for the lawsuit filed by MACo on May 1 and any countersuits that may arise.
MPERB also filed suit on May 1, against Lewis and Clark County asking the court to declare that the Montana Constitution gives it the authority to actuarially determine the unfunded liability related to PureView and to compel Lewis and Clark County to pay that liability.
Lewis and Clark County argues in their suit that MPERA representatives were involved in discussions about the PureView split before it happened and the issue of the pension liability was not raised.
Alluvion withdraws from consideration of contracting for county health services
According to the MACo lawsuit, there is no precedent of MPERA or MPERB assessing a withdrawal penalty against an employer participant that has a workforce reduction.
MACo and the counties argue that there is no administrative authority for MPERA to assess the penalty and no administrative procedure for appeal under the Montana Administrative Procedures Act.
County revising health officer job in hopes of finding person to reorganize
Schwinden told The Electric in the fall that his office had also notified Toole County of a potential penalty as it considers privatizing the Marias Medical Center in Shelby.
“This funding lapse of the county has resulted in this constitutionally mandated actuarial review of contributions tied to CHCC staff. If it is left unpaid, this amount will cause PERS pension obligations tied to CHCC to no longer be funded on an actuarially sound basis as required by the Montana Constitution and a disproportionate share of this liability will be paid for by all remaining state, county and local governmental entities participating in PERS. This will require taxpayers outside of Cascade County to be potentially burdened with future tax bill costs to pay for Cascade County’s unfunded PERS pension costs in order to prevent actuarial unsoundness” the the defined benefit plan, according to Schwinden’s November letter to Cascade County Commissioners.
County votes to move forward with negotiations to outsource health department functions to Alluvion
“They can’t walk away from a bill and spread it from all these other employers,” Schwinden said in an interview with The Electric last fall.
County considering outsourcing public health functions to Alluvion
He said it hadn’t been a common issue in Montana, but there had been a small business improvement district that separated from a government entity and they negotiated payments over several years to cover their unfunded liability.
Schwinden said in an interview with The Electric that similar medical centers have been privatizing nationwide in recent years and he said that in every instance, the courts have ruled they must pay the pension liabilities.
County, Alluvion partnering for health officer services temporarily
In Kentucky, the state retirement system and a mental health service provider have been locked in a legal battle for more than six years over pension liabilities. The provider had been a state entity that morphed to a nonprofit and attempted to not pay the pension liability when it declared bankruptcy. In August 2019, the Kentucky Supreme Court ruled the provider had a statutory obligation to pay the pension liability.
In 2014, a district court judge ruled that the City of Colorado Springs had to pay the Colorado Public Employees’ Retirement Association the employer portion of the pension liability for employees as a public hospital privatized, according to the Gazette.
Schwinden told The Electric in an interview that “we have a constitutional requirement to get that net pension system paid off.”
