Hoffman v. Pennsylvania State Employes' Retirement Board

743 A.2d 1014, 2000 Pa. Commw. LEXIS 2
CourtCommonwealth Court of Pennsylvania
DecidedJanuary 7, 2000
StatusPublished
Cited by5 cases

This text of 743 A.2d 1014 (Hoffman v. Pennsylvania State Employes' Retirement Board) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hoffman v. Pennsylvania State Employes' Retirement Board, 743 A.2d 1014, 2000 Pa. Commw. LEXIS 2 (Pa. Ct. App. 2000).

Opinions

SMITH, Judge.

Petitioner Linda Hoffman seeks review of an order of the State Employes’ Retirement Board (Board) which granted a motion of the State Employes’ Retirement System (SERS) to dismiss Petitioner’s appeal from SERS’ decision to pay death benefits to another named beneficiary of Robert Hoffman, a deceased member of SERS. Petitioner claimed entitlement to the death benefits as a previously designated SERS beneficiary of Decedent. Petitioner presents two questions for the Court’s review: whether the provisions of Section 5907(e) and Section 5907(j) of the State Employees’ Retirement Code (Code), 71 Pa.C.S. §§ 5907(e), 59070'), which allow a member to change his or her designated beneficiary at any time, violate the equal protection clause of the Fourteenth Amendment of the United States Constitution; and whether the application of Sections 5907(e) and 59070) violates Petitioner’s federal constitutional rights to due process of law as contained in the Fifth and Fourteenth Amendments.

Petitioner married Decedent, a Pennsylvania State Trooper entitled to retirement benefits under the SERS, on September 2, 1983. Decedent executed a nomination of beneficiaries form on September 7, 1983 which named Petitioner as the principal beneficiary and Kevin Hoffman, Decedent’s child by a previous marriage, as the contingent beneficiary. Decedent retired on February 26, 1993 and elected retirement “Option 1” under Section 5705(a) of the Code, 71 Pa.C.S. § 5705(a). Option 1 provides a lifetime annuity with a guaranteed total payment equal to the present [1016]*1016value of the life annuity effective on the date of retirement. If the member dies before receiving all of the benefits, the designated beneficiary receives the unpaid balance in the form of a death benefit. Under Sections 5907(e) and 5907© of the Code, members electing Option 1’ may change beneficiaries after retirement and may do so without providing notice or obtaining consent from the past beneficiary.1

After Decedent retired, Petitioner and Decedent experienced marital problems and became separated. On September 5, 1995, Decedent filed a divorce complaint in the Clearfield County Court of Common Pleas. On December 17, 1997, without Petitioner’s knowledge, Decedent executed a change of beneficiary form which removed Petitioner as the principal beneficiary and substituted Kevin Hoffman. Decedent died on January 30, 1998. No divorce decree was ever issued. SERS denied Petitioner’s request made in February 1998 for Decedent’s Option 1 death benefits because Decedent designated the principal beneficiary as Kevin Hoffman. Petitioner appealed to the Board and later sought injunctive relief before this Court seeking to enjoin SERS from paying death benefits to Decedent’s last named beneficiary. After Petitioner’s request was denied by this Court SERS paid the death benefits in June 1998 to Kevin Hoffman. The Board granted SERS’ motion to dismiss after concluding that it would refrain from ruling on Petitioner’s constitutional challenges to the Code, particularly where she raised no allegation that SERS failed to follow the Code.2

Petitioner first contends that Sections 5907(e) and 5907© of the Code violate the equal protection clause of the Fourteenth Amendment of the United States Constitution. Petitioner argues that the Code denies equal protection of the law to the class of beneficiaries of members who have selected Option 1 because those beneficiaries are not afforded the same protections as beneficiaries of members who select a different option. The first step in analyzing an equal protection claim is to determine what degree of judicial scrutiny should be applied to the classification at issue. Smith v. Coyne, 555 Pa. 21, 722 A.2d 1022 (1999). In Smith the Pennsylvania Supreme Court stated:

Strict scrutiny is applied to classifications affecting a suspect class or fundamental right. Intermediate scrutiny is applied to important rights and ‘sensitive’ classifications. In all other cases, the challenged legislation will be upheld unless there is no rational basis for its enactment.

Id., 555 Pa. at 29, 722 A.2d at 1025 (citations omitted). Petitioner argues that the Court should apply a strict scrutiny standard because her classification affects her fundamental right to own property.

It is well settled that only minimal scrutiny applies to statutory classifications employed in the regulation of economic benefits that do not discriminate against suspect classes. Martin v. Unemployment Compensation Board of Review, 502 Pa. 282, 466 A.2d 107 (1983). In City of Philadelphia Board of Pensions and Retirement v. Bordley, 84 Pa.Cmwlth. 645, 481 A.2d 690 (1984), a widow argued that the Philadelphia Municipal Pension Ordinance deprived her of equal protection of the law. The widow had lived with the [1017]*1017decedent without the benefit of marriage for approximately twenty years and had two children by him during that time. They were married eight months before his death. The Philadelphia Board of Pensions denied her application for her husband’s death benefits because she was married to him less than two full years prior to his death. The ordinance provided, inter alia, that no spouse shall be entitled to benefits unless such spouse was married to the deceased employee for not less than two full years prior to the employee’s death. On appeal, this Court applied a rational basis review and held that the ordinance did not deny the widow equal protection of the law.

Because the classification at issue does not involve a suspect or sensitive class and because the only right affected is Petitioner’s economic interest in her husband’s death benefits, the Court concludes that a rational basis review applies to the instant case. The Pennsylvania Supreme Court in Martin observed in relevant part:

In determining whether a classification is rational a court is free to hypothesize the reasons the legislature might have had for its classification. The courts do not require record evidence to justify the classification nor do they require the legislative history to show that the legislature had considered the particular rationale that satisfies the court. Indeed, legislative action always carries a strong presumption of constitutional validity.

Martin, 502 Pa. at 292, 466 A.2d at 111-112 (citations omitted).

The other retirement options (Options 2, 3 and 4) provide payment of reduced monthly benefits during the member’s lifetime and an annuity benefit paid to the designated survivor annuitant at the member’s death. Under Section 5907(j) of the Code, members who select Options 2, 3 or 4 may not change beneficiaries after retirement unless the beneficiary predeceases the member, a divorce is awarded or the member becomes married after the option is selected. SERS explains that effectuating the actuarial calculations necessary to pay a lifetime annuity requires detailed personal information from the survivor annuitant. If there were no limitations on the ability of members to designate new survivor annuitants, then SERS would be forced to constantly recalculate annuities to insure the soundness of the plan.

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Hoffman v. Pennsylvania State Employes' Retirement Board
743 A.2d 1014 (Commonwealth Court of Pennsylvania, 2000)

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Bluebook (online)
743 A.2d 1014, 2000 Pa. Commw. LEXIS 2, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hoffman-v-pennsylvania-state-employes-retirement-board-pacommwct-2000.