RENDERED: MAY 20, 2022; 10:00 A.M. TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2020-CA-0475-MR
KENTUCKY RETIREMENT SYSTEMS APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT v. HONORABLE PHILLIP J. SHEPHERD, JUDGE ACTION NO. 16-CI-01347
VICKIE WAGNER APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; K. THOMPSON AND L. THOMPSON, JUDGES.
THOMPSON, K., JUDGE: The Kentucky Retirement Systems (Systems) appeals
from the Franklin Circuit Court’s opinion and order which determined that Vickie
Wagner would not have to repay retirement benefits from the Systems for being
employed by a participating agency within three months of her retirement, where
her employment did not entitle her to any retirement benefits. We agree with the circuit court that any other outcome would be absurd as Wagner’s continuing
employment was extremely limited, did not entitle her to any retirement benefits,
and only resulted in de minimis wages. We further conclude that such a result
would not achieve the purpose or intent of the “double dipping” provision of
Kentucky Revised Statutes (KRS) 61.637(17)(a). Accordingly, we affirm.
KRS 61.637(17)(a) provides in relevant part that the benefits of a
retiree from Systems “shall be voided” if the retiree becomes “employed in a
position that is not considered regular full-time with an agency participating in one
(1) of the systems administered by Kentucky Retirement Systems . . . within three
(3) months following the member’s initial retirement date[.]”1
1 The version of KRS 61.637(17)(a) in effect from July 2014 to June 2015, the relevant time period here, more fully provided:
Except as provided by paragraphs (c) and (d) of this subsection, if a member is receiving a retirement allowance from one (1) of the systems administered by Kentucky Retirement Systems, or has filed the forms required to receive a retirement allowance from one (1) of the systems administered by Kentucky Retirement Systems, and is employed in a regular full-time position required to participate in one (1) of the systems administered by Kentucky Retirement Systems or is employed in a position that is not considered regular full-time with an agency participating in one (1) of the systems administered by Kentucky Retirement Systems within three (3) months following the member’s initial retirement date, the member’s retirement shall be voided, and the member shall repay to the retirement system all benefits received, including any health insurance benefits.
Though KRS 61.637 has been amended many times in the subsequent years, the changes have not substantively impacted the relevant, quoted portion of the statute.
-2- The core facts are essentially uncontested. Wagner began working as
a legal secretary for the local Commonwealth Attorney’s office in 1988. In 2009,
while still employed by the Commonwealth Attorney’s office, Wagner began
working limited, sporadic hours as an usher at an arena in Corbin, Kentucky (the
Arena), which was then owned by a private entity. However, in 2010, the City of
Corbin (Corbin) took over the Arena. Wagner then applied to work for Corbin,
which hired her in early 2011 to continue working as an usher at the Arena. It is
uncontested that Corbin participates in Systems, but it is also uncontested that
Corbin did not contribute to Wagner’s retirement benefits. In short, Wagner’s
usher job was with an entity which participated with Systems but in a job that had
no impact on her retirement benefits and did not materially contribute to her
support.
Wagner retired from the Commonwealth Attorney’s office as of
January 1, 2015. However, she continued to occasionally work as an usher at the
Arena. The parties stipulated during the administrative proceedings that Wagner
earned a total of nearly $300 for working at the Arena in February and March
2015.
On April 20, 2015, Wagner sent Systems a letter stating that she had
returned to work at the Commonwealth Attorney’s office as of April 16, 2015.
The letter from Wagner to Systems also stated: “I have also worked since 2009 for
-3- the City of Corbin at the Corbin Arena at events they have. These events only
occur very, very sporadically, sometimes only a few times a year.”
After Systems requested, and received, additional information about
Wagner’s employment at the Arena, it sent her a letter in June 2015 which voided
her retirement and required her to repay $20,062.77, representing $15,102.85 in
monthly retirement benefits between January and July 2015, as well as $4,959.92
in health insurance premiums paid by Systems during that period. Wagner filed an
administrative appeal.
Eventually, a hearing officer issued findings of fact, conclusions of
law, and a recommended order which was favorable to Wagner. The hearing
officer concluded that it was “illogical” for Wagner’s employment at the Arena to
impact her retirement benefits since she “did not receive nor was entitled to
received [sic] retirement benefits through her employment with the City of
Corbin.”
Systems filed exceptions to the hearing officer’s recommended
decision. In December 2016, Systems’ Board of Directors rejected the hearing
officer’s decision. The Board concluded that the “sole issue” was whether Wagner
was employed with an entity which participated in the Systems within three
months of her retirement. Because it was uncontested that Wagner had worked for
Corbin at the Arena within three months of retiring from the Commonwealth
-4- Attorney’s office, the Board concluded that Wagner’s retirement benefits had to be
voided under the plain language of KRS 61.637(17). The Board deemed it
immaterial that Corbin did not contribute to Wagner’s retirement benefits due to
her employment at the Arena.
Wagner filed a petition for judicial review of the Board’s decision in
the Franklin Circuit Court. After briefing, the circuit court issued an opinion and
order reversing the Board in March 2020. In relevant part, the court found that it
would be improper for Wagner to have to repay over $20,000 in benefits:
because of part-time, occasional pay earned between her retirement date and her reemployment with the [Commonwealth Attorney’s office] . . . . [Wagner] has satisfied the three-month separation in service requirement because her part-time job with the City is not [a] covered position with the [Agency], and she did not pay into the Retirement Systems while working for the City of Corbin. Thus, the Court reverses the [Board’s] Final Order directing [Wagner] to repay benefits conferred.
Systems then filed this appeal.
Since it sought to void Wagner’s retirement and compel her to repay
her benefits, Systems bore the initial burden of proof. See KRS 13B.090(7)
(providing “[t]he agency has the burden to show the propriety of a penalty imposed
or the removal of a benefit previously granted.”). Since the Board ruled in favor of
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RENDERED: MAY 20, 2022; 10:00 A.M. TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2020-CA-0475-MR
KENTUCKY RETIREMENT SYSTEMS APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT v. HONORABLE PHILLIP J. SHEPHERD, JUDGE ACTION NO. 16-CI-01347
VICKIE WAGNER APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; K. THOMPSON AND L. THOMPSON, JUDGES.
THOMPSON, K., JUDGE: The Kentucky Retirement Systems (Systems) appeals
from the Franklin Circuit Court’s opinion and order which determined that Vickie
Wagner would not have to repay retirement benefits from the Systems for being
employed by a participating agency within three months of her retirement, where
her employment did not entitle her to any retirement benefits. We agree with the circuit court that any other outcome would be absurd as Wagner’s continuing
employment was extremely limited, did not entitle her to any retirement benefits,
and only resulted in de minimis wages. We further conclude that such a result
would not achieve the purpose or intent of the “double dipping” provision of
Kentucky Revised Statutes (KRS) 61.637(17)(a). Accordingly, we affirm.
KRS 61.637(17)(a) provides in relevant part that the benefits of a
retiree from Systems “shall be voided” if the retiree becomes “employed in a
position that is not considered regular full-time with an agency participating in one
(1) of the systems administered by Kentucky Retirement Systems . . . within three
(3) months following the member’s initial retirement date[.]”1
1 The version of KRS 61.637(17)(a) in effect from July 2014 to June 2015, the relevant time period here, more fully provided:
Except as provided by paragraphs (c) and (d) of this subsection, if a member is receiving a retirement allowance from one (1) of the systems administered by Kentucky Retirement Systems, or has filed the forms required to receive a retirement allowance from one (1) of the systems administered by Kentucky Retirement Systems, and is employed in a regular full-time position required to participate in one (1) of the systems administered by Kentucky Retirement Systems or is employed in a position that is not considered regular full-time with an agency participating in one (1) of the systems administered by Kentucky Retirement Systems within three (3) months following the member’s initial retirement date, the member’s retirement shall be voided, and the member shall repay to the retirement system all benefits received, including any health insurance benefits.
Though KRS 61.637 has been amended many times in the subsequent years, the changes have not substantively impacted the relevant, quoted portion of the statute.
-2- The core facts are essentially uncontested. Wagner began working as
a legal secretary for the local Commonwealth Attorney’s office in 1988. In 2009,
while still employed by the Commonwealth Attorney’s office, Wagner began
working limited, sporadic hours as an usher at an arena in Corbin, Kentucky (the
Arena), which was then owned by a private entity. However, in 2010, the City of
Corbin (Corbin) took over the Arena. Wagner then applied to work for Corbin,
which hired her in early 2011 to continue working as an usher at the Arena. It is
uncontested that Corbin participates in Systems, but it is also uncontested that
Corbin did not contribute to Wagner’s retirement benefits. In short, Wagner’s
usher job was with an entity which participated with Systems but in a job that had
no impact on her retirement benefits and did not materially contribute to her
support.
Wagner retired from the Commonwealth Attorney’s office as of
January 1, 2015. However, she continued to occasionally work as an usher at the
Arena. The parties stipulated during the administrative proceedings that Wagner
earned a total of nearly $300 for working at the Arena in February and March
2015.
On April 20, 2015, Wagner sent Systems a letter stating that she had
returned to work at the Commonwealth Attorney’s office as of April 16, 2015.
The letter from Wagner to Systems also stated: “I have also worked since 2009 for
-3- the City of Corbin at the Corbin Arena at events they have. These events only
occur very, very sporadically, sometimes only a few times a year.”
After Systems requested, and received, additional information about
Wagner’s employment at the Arena, it sent her a letter in June 2015 which voided
her retirement and required her to repay $20,062.77, representing $15,102.85 in
monthly retirement benefits between January and July 2015, as well as $4,959.92
in health insurance premiums paid by Systems during that period. Wagner filed an
administrative appeal.
Eventually, a hearing officer issued findings of fact, conclusions of
law, and a recommended order which was favorable to Wagner. The hearing
officer concluded that it was “illogical” for Wagner’s employment at the Arena to
impact her retirement benefits since she “did not receive nor was entitled to
received [sic] retirement benefits through her employment with the City of
Corbin.”
Systems filed exceptions to the hearing officer’s recommended
decision. In December 2016, Systems’ Board of Directors rejected the hearing
officer’s decision. The Board concluded that the “sole issue” was whether Wagner
was employed with an entity which participated in the Systems within three
months of her retirement. Because it was uncontested that Wagner had worked for
Corbin at the Arena within three months of retiring from the Commonwealth
-4- Attorney’s office, the Board concluded that Wagner’s retirement benefits had to be
voided under the plain language of KRS 61.637(17). The Board deemed it
immaterial that Corbin did not contribute to Wagner’s retirement benefits due to
her employment at the Arena.
Wagner filed a petition for judicial review of the Board’s decision in
the Franklin Circuit Court. After briefing, the circuit court issued an opinion and
order reversing the Board in March 2020. In relevant part, the court found that it
would be improper for Wagner to have to repay over $20,000 in benefits:
because of part-time, occasional pay earned between her retirement date and her reemployment with the [Commonwealth Attorney’s office] . . . . [Wagner] has satisfied the three-month separation in service requirement because her part-time job with the City is not [a] covered position with the [Agency], and she did not pay into the Retirement Systems while working for the City of Corbin. Thus, the Court reverses the [Board’s] Final Order directing [Wagner] to repay benefits conferred.
Systems then filed this appeal.
Since it sought to void Wagner’s retirement and compel her to repay
her benefits, Systems bore the initial burden of proof. See KRS 13B.090(7)
(providing “[t]he agency has the burden to show the propriety of a penalty imposed
or the removal of a benefit previously granted.”). Since the Board ruled in favor of
Systems, the party which bore the burden of proof, “the issue on appeal is whether
the [administrative] agency’s decision is supported by substantial evidence, which
-5- is defined as evidence of substance and consequence when taken alone or in light
of all the evidence that is sufficient to induce conviction in the minds of reasonable
people.” McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458
(Ky.App. 2003). Our review of the circuit court’s interpretation of statutes and
administrative regulations, which underlies the heart of this appeal, is de novo.
Commonwealth v. Estate of Cooper, 585 S.W.3d 253, 257 (Ky.App. 2019).
“While agencies are entitled to great deference in interpreting their own statute[s]
and regulations, the reviewing court has the ultimate responsibility in matters of
statutory and regulatory construction.” Id.
KRS 61.637(17)(a) would seem to apply to these facts since Wagner
retired and was employed by a participating entity within three months of
retirement. However, we agree with the circuit court and hearing officer that it
would be absurd to use that statute to void Wagner’s retirement benefits under
these particular circumstances.
Generally, we are duty bound to interpret statutes as written, with no
leeway to create exceptions when none exist or to engraft onto the statute
additional language. See, e.g., University of Louisville v. Rothstein, 532 S.W.3d
644, 648 (Ky. 2017); Manning v. Kentucky Bd. of Dentistry, 657 S.W.2d 584, 587
(Ky.App. 1983). However, courts decline to accord the language of a statute its
literal meaning if doing so “would lead to an absurd or wholly unreasonable
-6- conclusion.” Hill v. Thompson, 297 S.W.3d 892, 895 (Ky.App. 2009). In other
words, because “there is a presumption that the legislature will not intend
an absurdity[,]” we are “unwilling to interpret the statute in a manner which would
indeed lead to an absurd result[.]” Id. at 896. A result is absurd if, among other
reasons, it is “against general common sense.” Id.
Additionally, in interpreting a statute, we are to “consider[] the evil
the law was intended to remedy.” Hearn v. Commonwealth, 80 S.W.3d 432, 434
(Ky. 2002). In 2008, then Governor Steve Beshear called a special session of the
General Assembly to reform our state pension system. In his remarks at the
beginning of the Joint Session of the General Assembly, Governor Beshear
expounded upon the fact that without reform the Commonwealth was facing “a
financial catastrophe” and urged reform to among other things “curb practices such
as double dipping” which cause “significant additional costs to the taxpayers of the
Commonwealth.” Kentucky Senate Journal, 2008 1st Ex. Sess. No. 1. “Double
dipping” in this context is of course “the simultaneous receipt by retired public
employees of both a salary for state reemployment and a state pension.” Retired
Adjunct Professors of the State of R.I. v. Almond, 690 A.2d 1342, 1347 (R.I. 1997).
See Baker v. Commonwealth, No. 2005-CA-001588-MR, 2007 WL 3037718, at *1
(Ky.App. Oct. 19, 2007) (unpublished) (footnote omitted) (explaining that one who
-7- “simultaneously enjoyed the benefits of his retirement from state government and
the benefits of his employment by state government . . . was a ‘double-dipper.’”).2
KRS 61.637(17)(a) was part of the pension reform bill adopted by the
General Assembly via its 2008 First Extraordinary Session, and the language we
are interpreting here was intended to be a remedy against double dipping. It makes
logical sense to prohibit employees who are drawing System retirement benefits
from simultaneously drawing a substantial salary from participatory members in
Systems during the three-month period after retirement or from making agreements
that after retirement they will be rehired. Previously, such practices could cost the
Commonwealth substantial sums as a retiree who was reemployed could draw
double benefits. See, e.g., Baker, 2007 WL 3037718, *1-7 (discussing the
coordination of benefits and entitlement of the retiree/employee to receive the total
premium amount above the fully paid health insurance cost paid through the cross-
listing of the employer and Systems’ plans, placed in a health savings account).
But that is not the situation when it comes to Wagner’s occasionally working for
the Arena as she did before and after her retirement.
Surely the General Assembly did not intend to require a retiree, such
as Wagner, to repay over $20,000 for earning around $300 in a job which had no
2 We cite this case not as authority, but to confirm that the Rhode Island explanation of this term is consistent with how it is used in Kentucky, and later to give an example of double dipping.
-8- impact whatsoever on her retirement benefits and could not tangibly contribute to
her support. We agree with the circuit court and hearing officer that such a result
is illogical, manifestly contrary to common sense, and does not forward the
interests behind the pension reforms.3 We cannot conclude that the General
Assembly intended to subject persons who have dedicated their professional
careers to serving the people of the Commonwealth of Kentucky before retiring to
such a disparate, harsh, illogical result.4 Wagner was simply continuing to engage
in her very part-time usher duties as she had while she was working for the
Commonwealth Attorney’s office, both before and after the Arena was owned by
Corbin. It is not logical to penalize her for this and reduce her promised benefits in
this manner. See generally Jones v. Bd. of Trustees of Kentucky Retirement
Systems, 910 S.W.2d 710, 713 (Ky. 1995) (discussing how “the retirement savings
system has created an inviolable contract” with “benefits promised to
participants”).
Over a century ago, Kentucky’s then-highest court held that “[t]he
first duty of a court in interpreting a statute is to construe it, if possible, so as to
3 The General Assembly must generally agree with this assessment as through 2016 Kentucky Acts ch. 25 (HB 153), it added KRS 61.637(17)(e) which provides that volunteers who earn a nominal fee for their volunteer services during this three-month period are not thereby prevented from also drawing their pensions. Although this provision was added after Wagner retired, we believe this provision would have prevented the injustice to her had it been in effect at that time. 4 Because the Agency’s interpretation of the statute cannot stand, we need not address the remainder of the parties’ various other arguments.
-9- give it sensible effect[.]” Adams v. Greene, 182 Ky. 504, 507, 206 S.W. 759, 760
(1918). The circuit court and hearing officer did so, and we agree with their
interpretation that under the facts before us, Wagner’s continuing employment with
the Arena was insignificant in every respect that mattered.
Accordingly, we affirm the Franklin Circuit Court’s opinion and order
reversing the Board’s decision requiring Wagner to repay her retirement benefits.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Kevin Edelman John Blevins Frankfort, Kentucky Corbin, Kentucky
-10-