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Ramsay v. Retirement Board

Court of Appeals of Utah

January 26, 2017

Lori Ramsay and Dan Smalling, Petitioners,
Retirement Board and Kane County Human Resource Special Service District, Respondents.

         Original Proceeding in this Court

          Brian S. King, Attorney for Petitioners

          David B. Hansen and Erin L. Gill, Attorneys for Respondent Retirement Board Timothy C. Houpt, Mark D. Tolman, and C. Michael Judd, Attorneys for Respondent Kane County Human Resource Special Service District

          Judge Gregory K. Orme authored this Opinion, in which Judges J. Frederic Voros Jr. and Kate A. Toomey concurred.


          ORME, Judge

         ¶1 Lori Ramsay and Dan Smalling seek judicial review of the

         Utah State Retirement Board's entry of summary judgment in favor of the Kane County Human Resource Special Service District, which operates the Kane County Hospital. Ramsay and Smalling contend that the board erred in granting summary judgment because the equitable discovery rule tolled the applicable statute of limitations. We uphold the board's decision.


         ¶2 In 1993, the special service district, acting as a subdivision of the state of Utah, established a defined contribution program for its employees. Specifically, the district established a 401(k) program and offered to match a certain percentage of its employees' contributions to their accounts. Lori Ramsay and Dan Smalling, two employees of the hospital, enrolled in the 401(k) program in 1994 and 1995 respectively.

         ¶3 At some point in 2006 or 2007, for reasons not pertinent to this appeal, the Internal Revenue Service notified some of the hospital's employees that it had frozen their 401(k) accounts, prompting Ramsay to inquire of the Utah Retirement Systems (URS) about her retirement benefits. In addition to responding to Ramsay's inquiry, URS sent Ramsay a questionnaire that it used to determine a public employer's eligibility to participate in URS. Ramsay passed this questionnaire on to the hospital, which completed it and returned it to URS.

         ¶4 After receiving the completed questionnaire, URS informed the hospital that it was required to participate in URS. At this time, the hospital first learned that its retirement program did not comply with the Utah State Retirement and Insurance Benefit Act (the Act). Specifically, the hospital learned that the Act required public employers who provide a defined contribution program, like a 401(k), to also provide a defined benefit program, whereby employees receive pensions upon retirement. See Utah Code Ann. § 49-13-202(3) (LexisNexis 2015).[2] Although the hospital provided 401(k) benefits for its employees, it never contributed funds to URS for employee pensions. As a result, URS demanded that the hospital retroactively pay contributions to URS on behalf of all of its employees from 1993, when the hospital first offered the 401(k) plan, to 2009, when it elected nonparticipation in URS in accordance with a new statutory provision. See supra note 2. The hospital refused, and URS filed a Notice of Board Action.

         ¶5 Meanwhile, Ramsay and Smalling sued URS, the hospital, and an insurance agency that assisted the hospital in establishing the 401(k) program, seeking to recover their pension benefits. Each defendant moved to dismiss, arguing that Ramsay and Smalling failed to exhaust their administrative remedies by not pursuing their claims before the board. The district court agreed and dismissed that case. Afterward, Ramsay and Smalling intervened in the administrative proceeding pending before the board, initiated by URS against the hospital.

         ¶6 In 2013, the hospital filed a motion for summary judgment in that proceeding, arguing that URS's claim for recovery was limited to three years under the applicable statute of limitations. See Utah Code Ann. § 78B-2-305(4) (LexisNexis 2012). URS, along with Ramsay and Smalling, opposed the motion, arguing that the limitations period should be tolled under the equitable discovery rule. The board's hearing officer granted the hospital's motion, concluding that ‚[t]here is no evidence in the record that the Hospital actively or affirmatively concealed its 401(k) plan from URS. Without such evidence “the concealment version of the equitable discovery rule does not apply.” Thus, the hearing officer limited the hospital's liability to the three years immediately preceding its election of nonparticipation in URS.

         ¶7 Following the hearing officer's summary judgment order, the hospital settled with all but six of its current and former employees who had a claim to unpaid pension contributions arising during the three-year period.[3] It then paid contributions to URS for its employees who did not settle, including Ramsay and Smalling. Soon after, the board filed a motion to dismiss “because all issues in the ...

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