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Utah high court overturns ruling against Kane County Hospital

First Published      Last Updated Mar 01 2014 09:12 pm

The Utah Supreme Court ruled Tuesday that Kane County Hospital employees should not have sued the hospital for retirement funds that were frozen in an Internal Revenue Service probe because they hadn't exhausted all other means of regaining access to their money.

The decision reversed a Utah Appeals Court ruling that plaintiffs Lori Ramsay and Dan Smalling may have been able to receive damages after other litigation against the hospital was resolved.

According to the high court's decision, "all of the claims asserted in [the] complaint fall within the scope of the Retirement Act," and the plaintiffs, the high court ruled, should have exhausted all other processes as outlined in the law before turning to a court to resolve their dispute.

In 1993, the Kanabhospital created a pension fund set up as a 401(k) to which employees contributed money, but state law at the time required any retirement programs for government entities be established through Utah Retirement Systems.

Employers, not workers, were expected to contribute to the fund — a fact that caused workers to accuse the hospital of denying them contributions they were legally owed.

No dollar amount has been cited in the dispute.

In 2007, the IRS began to investigate whether the employees who had withdrawn from the 401(k) account had any tax liabilities. Several years later, employees sued the hospital for money they allegedly had been denied from the hospital.

The Supreme Court's ruling Tuesday puts an end to the employees' attempt to regain funds the hospital insisted were not withheld on purpose.

According to the hospital, a mistake was made back when the hospital originally created retirement funds for its employees.


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