After the City of Portland discovered a 15-year-old error in its pension payment calculations for public safety members of the Fire Police Disability and Retirement Fund, the City tried to get back overpayments totaling more than $3 million, by taking it directly out of Fire and Police Pension benefits, without giving members a chance to respond or raise defenses. BHMK Attorney Hank Kaplan brought class action litigation challenging the City’s action, based on violations of Oregon’s wage deduction statute, 652.610. The City denied the statute applied, and contended that its action was justified by IRS requirements to preserve the tax qualified status of the pension plan. Multnomah County Circuit Judge Henry Breithaupt, a former tax attorney, rejected the City’s contentions and on July 26, 2012 ruled that the City violated the Oregon wage deduction statutes.
City Not Entitled to Recoup Overpaid Pension Benefits by Self-Help
