The Grand Junction Peace Officers Association has filed a class action lawsuit claiming the city of Grand Junction mismanaged the Employee Retirement Health Plan and that city staff misrepresented how the funds in the plan were held.
The Peace Officers Association is an unrecognized labor organization within the Grand Junction Police Department.
In 1998, according to the lawsuit, the city formed the Employee Retirement Health Plan, which uses employee contributions to fund health insurance for the employees from their retirement at age 50 or older until they are eligible for Medicare at 65, according to the lawsuit.
Over the past 20 years, the suit claims city staff had misrepresented that the funds for the health plan were held in a third-party trust. It specifically names retired Human Resources Director Claudia Hazelhurst, City Finance Director Jodi Welch and City Manager Greg Caton as having misled employees, City Council and even the federal government over the existence of the trust.
But no trust existed, according to the suit, which quotes Hazelhurst saying as much.
The suit makes largely the same claims that were laid out in a Notice of Claim — a prerequisite to filing a lawsuit — that was sent to the city in August 2019. In addition to the misleading statements about the trust, the suit claims the retirement funds have been co-mingled with the city’s general fund and used for “purposes other than paying retiree health premiums.”
Sometime around 2009 and 2010, the suits says, the city closed a “Private Purpose Trust” that allegedly held the retirement plan funds. According to a budget document, the suit says the city moved the money to the self-insurance fund, but the plaintiffs say it’s not entirely clear where the money was actually held.
“Based upon the multiple directly conflicting representations it is virtually impossible to ascertain where the (Retirement Health Plan) monies were being maintained, who was managing the funds and what guidelines and responsibilities those responsible for managing the funds were following,” the complaint reads.
When the initial Notice of Claim was sent to the city, both Welch and Caton said the funds were in a separate account and did not consider them as co-mingled with the general fund. Welch also said at the time that the funds were never used for anything other than retiree benefits.
Since the 2019 notice, the city and the Peace Officers Association had discussions about the issues raised, but did not come to a resolution, attorney for the plaintiffs Benjamin Wegener said. He said his firm, Wegener Scarborough and Lane, was brought on within the last six weeks and filed the suit in late April.
“We’re always hopeful when you get into a case such as this that the parties are ultimately able to resolve the matter, but, for lack of better terms, you can’t put this on hold forever to try to work something out,” Wegener said. “Somebody has to move it forward to resolution.”
In order to move forward, the lawsuit is asking for a jury trial on the claims it has made.
It stated in the filing that the plaintiffs have suffered an undetermined amount of damages and will continue suffering damages. Wegener said moving forward with a lawsuit opens options for information gathering.
The City Council was briefed on the lawsuit Wednesday night in executive session. City Council and staff will not be commenting on the lawsuit, according to a release from the city.
However, City Attorney John Shaver did release a statement.
“The history of the retiree health benefit is long and complicated and the City has made very reasonable and responsible changes to try and maintain it for eligible employees in the face of very costlier and complex healthcare,” Shaver said. “It is unfortunate that the POA has initiated this action given the work that has been done and the investment made by the City to provide the benefit. The City will vigorously defend the claims made against it and Greg Caton, Jodi Welch and Claudia Hazelhurst.”