I don't know if this will qualify as a scandal but I am pretty sure you are reading this here first
- Sarah Palin endorsed a contingency lawsuit against one of the State of Alaska's pension consultants after the state legislature refused to bankroll the legal effort:
The state filed a $1.8 billion malpractice lawsuit Thursday against a consulting firm it claims is a reason Alaska's public employee pension system is in crisis.
The state alleges that Mercer Human Resource Consulting Inc. gave negligent advice and even made basic math errors. Mercer was the state's actuary company and advised Alaska on its public employee and teacher retirement systems for nearly 30 years until being replaced in 2005.
"Fully aware of the billions of dollars at stake, Mercer nevertheless made fundamental errors in methodology and even in basic calculations, and failed to assign competent, experienced personnel to work for the plans," the state charged in its lawsuit.
The state claims Mercer badly miscalculated the growth rate of health care costs. Public employers used Mercer's actuarial information in deciding how much they should contribute to the pension funds.
Gov. Sarah Palin asked the Legislature this spring for $12 million to pay for the lawsuit. Lawmakers refused to give her the money.
"At that time my concerns had not been answered as to the probability of prevailing in the lawsuit," said Anchorage Republican Rep. Mike Hawker, a member of the Finance Committee.
The state has instead negotiated a contingency agreement with the law firm it retained to assist in the suit. The firm will get a percentage of whatever award Alaska receives after costs, ranging from 25 percent if the award is up to $200 million to 5 percent if Alaska prevails for more than a billion dollars.
That New York firm -- Paul, Weiss, Rifkind, Wharton and Garrison -- is also paying the Juneau firm of Lessmeier and Winters to help.
Hawker said the contingency seems to be a responsible way for the state to pursue what could be challenging litigation.
Sitka Republican Sen. Bert Stedman also said he's comfortable with that approach to the suit.
"Clearly there's some question as far as the quality of work done by Mercer," said Stedman, co-chair of the Senate Finance Committee.
The lawsuit was filed in Alaska Superior Court in Juneau.
Here is a bit of the Google-cache of a gone-but-not-forgotten State of Alaska announcement:
State Files Suit Against Mercer Seeks $1.8 Billion in Damages
December 6, 2007, Juneau, Alaska - Governor Palin today announced the filing of a lawsuit by Attorney General Talis Colberg and the Department of Law against Mercer (US) Inc., the former actuary for Alaska’s Public Employees’ Retirement System (PERS) and Teachers’ Retirement System (TRS) pension plans. The lawsuit seeks more than $1.8 billion in damages from Mercer for mistakes in calculating the pension plans’ expected liabilities, including mistaken actuarial assumptions and methods about future health care costs, and basic mathematical and technical errors.
“I am committed to aggressively pursuing the ’healing’ of Alaska’s retirement plans so the burden of the several-billion-dollar unfunded liability does not fall on the backs of ordinary citizens. Filing this lawsuit is an important step in that process,” Governor Palin said.
Here is other coverage. If a PACER maven could track that suit through what I presume is the Federal Court in Juneau that would be lovely. I am reasonably certain the suit is still alive because I heard about it at a picnic this afternoon from a Mercer employee. Now, a bit of disclosure - my source probably would not have been a Palin fan even absent the lawsuit; OTOH, he was explicit in saying he had no idea whether she was involved with the suit. From the reporting she was sufficiently involved to let herself get quoted backing it.
So what does it mean? Well, perhaps Republican disdain for trial lawyers and speculative contingency lawsuits is a sometime thing. Superficially this suit appears to me to be yet another public entity that would prefer to flail about and sue someone rather than than admit that they deliberately under-funded their pension plans in order to avoid raising taxes or cutting services. But I say that as a Jersey guy where that sort of behavior was the norm; maybe Alaska has a legitimate beef here. Maybe. In any case, Ms. Palin would not have been governor during the period if underfunding, but she could have blown the whistle on the lawsuit.
This is by no means a major scandal even if the lawsuit is substantially without merit. Let's file it under "Troubling". By way of comparison, file this under "How does he keep a straight face?"