Memorial Health System, Colorado Springs, Colo., is considering filing suit against the $41.1 billion Colorado Public Employees’ Retirement Association, Denver, to pull its retirement assets as part of its plans to become a non-profit private hospital.
The amount of assets Memorial Health wants to withdraw from COPERA could not be learned by press time.
Talks on privatizing Memorial Health System, which is operated by the city of Colorado Springs, began with city officials in 2010, but COPERA notified the hospital and city earlier this year that the hospital would have to give the system $246 million to cover its unfunded liabilities.
The local government division of COPERA, which represents workers at Memorial — one of five divisions in the system — was 73% funded as of Dec. 31, according to COPERA’s 2010 annual financial report.
“Memorial, a city enterprise, believes it has fully met its obligations to the state pension system and would owe nothing more if it were to reorganize into a non-governmental entity. The state statute governing PERA supports this position,” hospital officials stated in a letter to the retirement system on Aug. 24. “Despite this, Memorial tried to resolve this amicably. Most recently, Memorial offered PERA $50 million in a last attempt to find common ground. That offer was refused, and PERA made no counteroffer.”
The system responded in a letter to Memorial on Aug. 26 that “every dollar in reduction from the statutory calculation will have to be paid by the other participating employers.”
Brian Newsome, a spokesman for the hospital, said in a telephone interview that the Colorado Springs City Council would have to approve filing the lawsuit.
COPERA spokeswoman Katie Kaufmanis said in a telephone interview that about 4,100 of the system’s 200,000 members work at Memorial. She declined further comment on the potential lawsuit.