Balto. Co. could owe more than $19 million in pension case

Baltimore County may have to pay more than $19 million back to thousands of retirees and employees who for years contributed to a pension system that courts have ruled discriminated against beneficiaries on the basis of age.

The U.S. Supreme Court recently refused to hear the county's appeal in the case, effectively ending its legal challenge. Now, the task becomes figuring out how much the county must pay back, and to whom — a process that could take several years.


In a memo sent to County Council members late last week, council attorney Thomas Bostwick warned that the financial impact of the case could be "sizable" and that determining damages would be a daunting task.

"If you thought the liability aspect was complicated, imagine the difficulty in going through a mountain of retiree files and determining what their contribution amounts were, what they should have been, based on the Court's ruling, and what they perhaps may be due in a refund," Bostwick wrote to the council's seven members.

The U.S. Equal Opportunity Employment Commission sued the county in 2007, alleging that its pension system violated the Age Discrimination in Employment Act because older workers had to pay more toward retirement than younger workers.

The county has maintained that the payment structure did not break discrimination laws. After a federal judge's decision in 2012, officials with County Executive Kevin Kamenetz's administration vowed to fight the agency aggressively and took the case all the way to the U.S. Supreme Court, which decided last month not to hear the case.

According to Bostwick's memo, county officials estimate damages could total $17 million to $19 million, "but that number could be higher eventually."

In an email to The Baltimore Sun on Tuesday, EEOC attorney Maria Salacuse said that the next phase in the case will be to determine damages in U.S. District Court, but she declined to comment further, saying it would be premature.

In federal court filings, lawyers for the Kamenetz administration have said that determining damages could take at least two years and involve 10,000 paper retirement files, as well as electronic files, plus analysis by actuarial experts.

EEOC lawyers have disputed the notion that the damages phase would be so lengthy or involve so many paper files.


The EEOC lawsuit was filed on behalf of employees hired before 2007, which is when the county changed its pension system so that workers hired after July 1 of that year contributed to the retirement system at a flat rate not based on their age at hiring. When the lawsuit was filed, the retirement system covered 9,500 active employees and 6,600 retirees.

Through a spokeswoman, Kamenetz declined Tuesday to comment on the Supreme Court's decision and referred questions to the county's Office of Law.

County Attorney Mike Field gave an estimate of up to $19 million to the County Council's lawyers, but told The Sun that was a "back-of-the-envelope" calculation and he didn't want to pin down a specific amount of what he thinks the county might owe.

"We're so far away from that, I'm loath to predict anything," he said.

Field acknowledged that the payout could be millions of dollars to thousands of employees who participated in the pension plan when it was deemed to be discriminatory. He expects that the EEOC will hire actuaries to calculate payouts for each employee, but declined to say if the county would hire its own experts.

The county hired an outside law firm to assist with appealing the case to the Supreme Court, a contract worth up to $42,000 that was approved by the council. Field said the county's own legal staff will handle the case moving forward.


There are three possible ways that employees and retirees could be paid back, Field said: from county taxpayers, from its pension adviser, or from pension plan participants themselves through adjustments to their contributions.

Field said the details of the court's decision could determine how the employees are paid.

Asked if the county will lean on its consulting firm to pay the bill, Field said: "We're exploring all of our options for how to move forward."

Members of the County Council were informed of the court's decision in recent days, a month after the Supreme Court decided not to hear the case. Field said his office simply forgot to tell the council.

Councilwoman Vicki Almond said she was disappointed that the county was on the losing end of potentially expensive litigation, and that council members were not kept in the loop.

She pointed to other court cases the county has lost. Earlier this year, the county paid the police union about $228,000 in interest accrued while the county fought court rulings in a separate court case involving retiree health insurance.

"It concerns me that we continue to take these cases to court," said Almond, a Democrat from Reisterstown. "We keep losing, but we keep taking them on and we're wasting taxpayer money and we end up having to pay anyway,"