The Milwaukee County Pension Plan is considering a lawsuit against Mercer Human Resource Consulting for not alerting them to the fact that a 2000 pension-design change could cost the county millions, according to the Milwaukee Journal Sentinel.
The malpractice suit stems from pension sweeteners granted in 2000 under County Executive Thomas Ament. In October 2000, at a Pension Study Commission meeting, pension-architect Gary Dobbert – who has since been convicted of criminal misconduct – lied in stating that an actuary has studied a new benefit-payout scheme. The new plan provided an option for retirees to take a lump-sum check on top of their regular – but reduced – monthly checks.
Mercer actuaries were attending the meeting, according to the Sentinel, but did not contradict Dobbert. The lead actuary from Mercer – who had been hired by the county – said that he was “surprised” at the lie told by Dobbert, but failed to do anything about it. Because he failed to speak up – a move that cost the County large sums of money in payouts – a potential lawsuit against Mercer is being considered.
The suit would be brought over Mercer’s alleged failure to correctly estimate the costs of such a plan. However, officials admit that the move may be a hard sell to the courts, since Mercer has been retained by the county, its insurers and the Pension Board in the three years since the deal’s costs became known, according to the paper.
This move to sue an actuary for malpractice is become more popular, according to Laura Bloom of the American Academyof Actuaries, the Sentinel reports. The success of such lawsuits, however, has varied. Most recently, the New York District Council of Carpenters Pension Fund lost a ruling in a case pitting them against actuaries over charges of fee disgorgement (See Union Fund Loses Fee Disgorgement Ruling ).