Baltimore County government ended a 70-year relationship with a consulting firm that gave advice on the county’s pension fund and sued the company, alleging it’s responsible for a multi-million dollar judgment against the county.
The county is on the hook for up to $19 million as a result of the lawsuit brought by the U.S. Equal Employment Opportunity Commission in 2007. The EEOC claimed — and courts agreed — that the pension plan discriminated against older county government workers by requiring them to pay more money into the plan than younger workers.
For 70 years, the county has contracted with Buck Consultants, a subsidiary of Xerox Corp., for advice on how to manage the pension plans for county workers.
In a lawsuit filed in U.S. District Court, the county claims Buck Consultants gave bad actuarial advice that led to the defeat in court, and wants the company to pay for the millions the county is likely to owe former workers.
“The county’s pension system is based upon the advice received by Buck over the years, and the contract makes clear that Buck is responsible for any advice that may be illegal,” said county spokeswoman Fronda Cohen in a statement.
A spokesman for Buck countered that the company has provided “sound, industry-proven service.”
“This lawsuit is disappointing, and an unfortunate attempt by the county to deflect (from) the dispute that the county has been involved with the EEOC for the past eight years,” said Carl Langsenkamp, a Xerox spokesman.
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.
The county appealed all the way up to the U.S. Supreme Court, which announced in November it would not hear the case. The county likely will have to repay the workers who overpaid into the pension plan, which could cost up to $19 million, according to county officials.
The amount of damages hasn’t been finalized yet by the courts. The county has said that process could take at least two years because thousands of documents will need to be reviewed.
County officials previously said they were “exploring all of our options” for getting the money to repay workers.
The county filed its lawsuit against Buck Consultants in January. Immediately before filing the suit, the county ended its contract with Buck and hired another firm, the Baltimore-based Bolton Partners, on a short-term contract worth $25,000 — the maximum amount for a contract not needing approval by the County Council.
The council will vote on Monday on a longer-term deal with Bolton Partners, which already gives the county actuarial advice on its employee and retiree health insurance plans.
If approved by the council, the county will pay Bolton approximately $363,000 for two years of consulting services.