Attorneys yesterday (Wednesday) argued the merits of the state’s eleven Billion dollar lawsuit against Mercer, Inc. That’s the actuarial consulting firm that was advising the state at the time the Retirement Systems began to develop their current financial shortfall. The Retirement Management Board has charged Mercer with malpractice, breach of contract, fraud and misrepresentation.
Supporting a motion to dismiss the case, Mercer attorney Wes Howell said the state has not linked any specific charge with any specific amount of damage. Additionally, he said the state did not follow the advice that Mercer had given to prevent the problems. As an example, he said that in 2002 Mercer recommended the employer contribution to pension benefits be increased to nearly twenty five percent. But that never happened.
In fact, the contribution rate that was adopted was not 24.91, but 11.77. and yet at the same time they are saying they relied on the 24.91 recommendation and implicitly saying if we’d recommended 30 they would have done something different. When in fact they rejected – or decided consciously – not to follow the recommendation that had been made by Mercer in 2002.
Arguing against dismissing the case, the state’s attorney Lew Clayton said the links can be made in trial, not in a motion hearing. He argued that if the retirement system’s true financial condition had been known, the state could have taken steps to avoid the shortfall.
He also cited cases of unqualified people servicing the account, failure to consider information the state had pointed out, and he said Mercer concealed the correct information.
They lied to us for years about the findings they had made. They were hired – and the complaint says this, it comes out of their own mouths – they were hired with one paramount purpose in mind: to calculate the liabilities of the plan, to give us advice about what contribution levels to set, because they knew exactly how we were relying upon that advice. How do we know they knew? Their sworn testimony, their own documents.
The state is asking for two-point-eight Billion dollars in injuries, plus triple that amount in damages, and an unspecified amount in punitive damages.
The judge asked for more, written information before making a decision on the motion to dismiss. Trial is now scheduled for next Spring, but that could be delayed.