State Ex Rel Stowe v. Board of Admi

• Court: Montana Supreme Court
• Decided: May 11, 1977
• Docket: 13274
• Status: Published

Opinion

No. 13274

I N T H E SUPREME COURT O F T H E S T A T E O F MONTANA

S T A T E O F MONTANA ex r e l . D A N I E L J . STCPJE,

Petitioner,

BOARD O F A D N I N I S T R A T I O N O F THE P U B L I C EMPLOYEES R E T I R E M E N T D I V I S I O N AND F R E D BARRETT, W.M. C O C A L E S , F R E D L . H I L L , J O H N L . P R E B I L , and K E V I N J . SHANNON, M e m b e r s thereof,

Respondents.

Appeal from: D i s t r i c t C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t , H o n o r a b l e Peter G. M e l o y , Judge p r e s i d i n g .

C o u n s e l of R e c o r d :

For I ? - e t i t i o n e r :

H u b e r t J . M a s s m a n a r g u e d a n d Joseph M a s s m a n a p p e a r e d , Helena, Montana

For R e s p o n d e n t s :

Stuart Kellner, Special A s s i s t a n t A t t o r n e y , argued, Helena, Montana M i c h a e l J. H u g h e s , Helena, Montana

Submitted: January 1 7 , 1 9 7 7

Decided: M-AY 11 1977 Filed: HA^ 1 $gli M r . J u s t i c e Daniel J . Shea d e l i v e r e d t h e Opinion of t h e Court.

D a n i e l Stowe, a member of t h e Montana P u b l i c Employees'

Retirement System (PEKS), a p p e a l s from a judgment of t h e d i s t r i c t

c o u r t , Lewis and C l a r k County, d i s m i s s i n g h i s p e t i t i o n f o r a w r i t

of m a n d a t e d i r e c t e d a g a i n s t t h e board of a d m i n i s t r a t i o n of

PEKS . The d i s t r i c t c o u r t h e l d t h a t Stowe had a remedy of j u d i c i a l

review under t h e Montana A d m i n i s t r a t i v e Procedure Act (MAPA)

b u t l o s t i t by n o t p e t i t i o n i n g f o r review w i t h i n t h e s t a t u t o r y

30 days. Although n o t r e q u i r e d t o do s o i n l i g h t of i t s r u l i n g

on t h e motion t o d i s m i s s , t h e d i s t r i c t c o u r t a l s o r u l e d on t h e

m e r i t s of t h e claim. The c o u r t h e l d t h a t when an employee under

PEKS i s r e a d m i t t e d t o PERS f o r t h e purpose of o b t a i n i n g d i s a b i l i t y

b e n e f i t s , t h e PERS board h a s t h e r i g h t t o determine t h e d a t e

when t h e b e n e f i t s s h a l l commence. Stowe a p p e a l s from b o t h r u l i n g s .

O October 25, 1972, Stowe f e l l down a f l i g h t of s t a i r s i n n

t h e c o u r s e of h i s work a s an employee of t h e c i t y of Helena. His

i n j u r i e s rendered him t o t a l l y and permanently d i s a b l e d . After

r e c e i v i n g c r e d i t f o r accrued v a c a t i o n time and s i c k l e a v e , Stowe's

employment was t e r m i n a t e d on November 1 3 , 1972. On November 20,

1972, Stowe was g i v e n an a p p l i c a t i o n f o r a refund of h i s c o n t r i b u -

t i o n s t o t h e PERS d u r i n g h i s employment by t h e c i t y of Helena.

H e was n o t t o l d , and he d i d n o t know, he had a r i g h t t o a p p l y f o r

a d i s a b i l i t y r e t i r e m e n t allowance. Stowe s i g n e d t h e a p p l i c a t i o n

f o r a refund of h i s PERS c o n t r i b u t i o n s and upon r e c e i v i n g h i s

c o n t r i b u t i o n s of $889.77, he l o s t a l l membership b e n e f i t s under

PEKS. S e c t i o n 68-1603, R.C.M. 1947, of t h e P u b l i c Employees'

Ketirement Act p r o v i d e s : " I f any part of a member's accumulated normal c o n t r i b u t i o n s a r e refunded pursuant t o s e c t i o n 68- 1905, he c e a s e s t o be a member and a l l membership s e r v i c e t o h i s c r e d i t i s canceled. Any person who i s r e t i r e d . c e a s e s t o be a member. 11

S e z t i o n 68-1905, R.C.M. 1947, permits a refund of c o n t r i b u t i o n s ,

i f a member's s e r v i c e i s d i s c o n t i n u e d because of d i s a b i l i t y .

I n February 1975, Stowe a p p l i e d t o t h e PERS board f o r r e i n -

statement i n t h e PERS and submitted a c l a i m f o r d i s a b i l i t y

r e t i r e m e n t allowance. The PERS board approved Stowe's r e i n s t a t e -

ment and granted h i s d i s a b i l i t y claim on t h e c o n d i t i o n t h a t Stowe

r e d e p o s i t t h e amount of h i s PERS c o n t r i b u t i o n s withdrawn, t o g e t h e r w i t h

accrued i n t e r e s t on t h i s amount. Stowe d e p o s i t e d t h i s money on

March 28, 1975 and t h e PERS board determined h i s d i s a b i l i t y

b e n e f i t s would s t a r t from t h e - d a t e of d e p o s i t . Upon making h i s

d e p o s i t however, Stowe simultaneously r e q u e s t e d t h a t b e n e f i t pay-

ments r e l a t e back t o t h e d a t e of t h e i n j u r y (October 25, 1972)

and requested a h e a r i n g a f t e r he f i l e d t h e necessary i n f o r m a t i o n

and documentation.

I n support of h i s c l a i m i n e a r l y A p r i l 1975, Stowe submitted

t o t h e PERS board a p e t i t i o n and s e v e r a l a f f i d a v i t s and a g a i n

s p e c i f i c a l l y requested an o p p o r t u n i t y t o appear b e f o r e t h e PERS

board should i t have any q u e s t i o n s r e l a t i n g t o h i s claim. The

PERS board a t no time i n d i c a t e d i t had any q u e s t i o n o r t h a t i t

was disposed t o a c t a d v e r s e l y t o Stowe's p e t i t i o n f o r b e n e f i t s

from t h e d a t e of i n j u r y . Under t h e s e circumstances one could

conclude t h e PERS board had decided t o a c t f a v o r a b l y on t h e

p e t i t i o n , otherwise i t would have given Stowe a h e a r i n g . Without

,I\ g r a n t i n g a h e a r i n g d a t e , t h e PERS board met on May 9 , 1975, and

ruled against Stowets,petition. He was informed of i t s d e c i s i o n

by l e t t e r dated May 27, 1975. Stowe commenced a c t i o n on J u l y 1 7 , 1975, f o r a w r i t of man-

damus t o compel t h e PERS board t o s t a r t payment of d i s a b i l i t y

payments from t h e d a t e of i n j u r y .

F i r s t we c o n s i d e r whether t h e PERS board had d i s c r e t i o n t o

s t a r t s t o w e ' s d i s a b i l i t y r e t i r e m e n t allowance on March 28, 1975,

t h e d a t e of h i s r e i n s t a t e m e n t a s a member of t h e PERS. Section

68-2102, R.C.M. 1947, s t a t e s i n p e r t i n e n t p a r t :

"* ** The r e t i r e m e n t allowance payable t o a member who h a s become d i s a b l e d s h a l l commence on t h e day following t h e member's l a s t day of membership s e r v i c e . " (Emphasis added.)

Stowe claims t h i s s t a t u t e d e p r i v e s t h e PERS board of any d i s -

cretion. The board argues t h i s s t a t u t e does n o t apply t o a d i s -

a b l e d person who h a s been r e i n s t a t e d a f t e r p r e v i o u s l y t e r m i n a t i n g

h i s membership i n t h e PERS under s e c t i o n 68-1603.

The PERS board argues t h e r e a r e no s t a t u t o r y p r o v i s i o n s

which s p e c i f i c a l l y allow a d i s a b l e d person t o be r e i n s t a t e d t o

membership under PERS, without simultaneously being r e a d m i t t e d t o

t h e work f o r c e a s a n employee. Since Stowe was n o t r e a d m i t t e d t o

t h e work f o r c e , b u t o n l y t o membership i n PERS, i t a r g u e s t h e

PERS board a c c o r d i n g l y has broad d i s c r e t i o n a s t o when h i s b e n e f i t s

a r e t o commence. The board r e l i e s on two s t a t u t e s , s e c t i o n

68-1601(2) and s e c t i o n 68-1803 ( I ) , R.C.M. 1947.

S e c t i o n 68-1601(2), r e f e r s t o r e - e n t e r i n g employment and

provides i n p e r t i n e n t p a r t :

"Every employee who r e - e n t e r s s e r v i c e s h a l l become a member u n l e s s he has had a n o r i g i n a l e l e c t i o n of exemption from membership and h i s s e r v i c e was n o t i n t e r r u p t e d by a b r e a k of more than one (1) month. * * *" (Emphasis added.)

S e c t i o n 68-1803(1) covers t h e a u t h o r i t y of PERS and

provides i n p e r t i n e n t p a r t : "The board of administration may establish such rules and regulations as it deems sroper for the administration and operation of the retirement system and enforcement of this act, subject to its limitation. The board shall determine who are employees within the . meaning of this act. The board shall be the sole authority under this act as to the conditions under which persons may become members and receive benefits under the retirement system. The board shall determine and may modify allowances for service and disability under this act. * * *I1

From these statutes the PERS board argues that since section

68-1601(2) is.the only specific reference in the act to rein-

statement.~£ any person, that it necessarily follows that section 68-2102 applies only to reinstated members who have re-entered

service as employees, Further, since Stowe did not re-enter as

an employee, but as a disabled person, the PERS board then is free

to exercise its discretion in determining when to commence his

disability retirement allowance. We do not agree. Even assuming that under section 68-1803(1) the PERS board

may determine in its discretion whether or not to reinstate disabled

persons, it does not necessarily follow that it may also determine

when to commence disability retirement allowances. The two acts

are distinct. The act of allowing a disabled person back into

the PERS perhaps may be discretionary but the time when the dis-

ability retirement allowance starts to run arises by operation of

statute.

The PERS board falsely concludes that section 68-2102 applies only to reinstated members who have re-entered service as employees.

Section 68-2102 does not distinguish between members who have been reinstated pursuant to section 68-1601, and members who have been reinstated in the board's discretion under section 68-1803(1).

It refers only to "a member who has become disabled". Further,

section 68-1906, R.C.M. 1947, provides in part: "Except a s otherwise provided i n t h i s s e c t i o n , any person who a g a i n becomes a member subsequent t o t h e refund o f h i s accumulated normal c o n t r i b u t i o n s a f t e r a t e r m i n a t i o n of previous membership i s con- s i d e r e d a new member without c r e d i t f o r any previous membership s e r v i c e , and he may r e i n s t a t e t h a t membership s e r v i c e by r e d e p o s i t i n g t h e sum of t h e accumulated normal c o n t r i b u t i o n s which were refunded t o him a t t h e l a s t t e r m i n a t i o n o f h i s membership p l u s t h e i n t e r e s t which would have been c r e d i t e d t o h i s account had t h e refund n o t taken p l a c e . I f he makes t h i s r e d e p o s i t , h i s membership s h a l l be t h e same a s i f unbroken by such l a s t termina- tion, * * *" (Emphasis added.)

Reading t h e s t a t u t e s t o g e t h e r i t i s c l e a r t h e words i n

s e c t i o n 68-2102 encompass a l l members, i n c l u d i n g d i s a b l e d persons

who have been r e i n s t a t e d . This i s consistent with the l e g i s l a t i v e

i n t e n t a s expressed i n s e c t i o n 68-1501, R.C.M. 1947, t o provide

a means of providing replacements f o r i n c a p a c i t a t e d employees

i n t h e p u b l i c s e r v i c e without h a r d s h i p o r p r e j u d i c e t o t h e incapa-

c i t a t e d employee. S e c t i o n 68-2102 l e a v e s no room f o r t h e e x e r c i s e

of d i s c r e t i o n . Stowe i s e n t i t l e d t o a d i s a b i l i t y r e t i r e m e n t

allowance commencing on t h e day following h i s l a s t day of membership

service.

W n o t e t h i s s i t u a t i o n would never have occurred i f Stowe e

had been f u l l y informed of h i s o p t i o n s a t t h e time of h i s a c c i d e n t .

H e could t h e n have made a knowing e l e c t i o n . I n s t e a d , he was

handed a n a p p l i c a t i o n f o r a r e t u r n w i t h o u t n o t i c e of h i s r i g h t

co apply f o r a d i s a b i l i t y r e t i r e m e n t allowance, thereby g r e a s i n g

the wheels f o r h i s l o s s of r i g h t s under PERS. Such p r a c t i c e works

a complete f r u s t r a t i o n of t h e l e g i s l a t i v e w i l l and s e r v e s only t o

undermine confidence i n t h e a d m i n i s t r a t i v e process.

The PERS board a l s o argues t h a t Stowe l o s t any r i g h t t o

h i s c l a i m by n o t a p p e a l i n g t o t h e d i s t r i c t c o u r t w i t h i n t h e s t a t u t o r y

30 days provided i n t h e MAPA, s e c t i o n 82-4216(2), R,C.M. 1947. There i s no q u e s t i o n t h a t Stowe d i d n o t f i l e an a c t i o n w i t h i n

t h e s t a t u t o r y time l i m i t s , b u t under t h e circumstances h e r e ,

we hold t h e PERS board i s estopped from claiming Stowe had a

duty t o use M P a s h i s s o l e remedy. AA To hold otherwise would be

t o hold Stowe t o h i s remedy under MAPA, under circumstances

where t h e PERS board a t no time i n d i c a t e d i t was bound by and

a c t i n g pursuant t o t h e MAPA. Such a holding would be m a n i f e s t l y

unfair.

When Stowe f i r s t a p p l i e d f o r d i s a b i l i t y b e n e f i t s s t a r t i n g

on t h e day of h i s i n j u r y , he asked f o r a h e a r i n g should t h e

PERS board have any q u e s t i o n s concerning h i s p o s i t i o n . When Stowe

f i l e d h i s p e t i t i o n along w i t h supporting a f f i d a v i t s and p a p e r s ,

he a g a i n asked f o r a h e a r i n g should t h e r e be any q u e s t i o n s . The

PERS board d i d n o t r e p l y t o e i t h e r r e q u e s t and proceeded t o a

d e t e r m i n a t i o n of h i s r i g h t s without a h e a r i n g .

Notice and h e a r i n g a r e specifically.provided'for under s e c t i o n 8& a - 4 2 0 9 , R.C.M.1947. It s t a t e s i n r e l e v a n t p a r t :

" ( 1 ) I n a c o n t e s t e d c a s e , a l l p a r t i e s s h a l l be a f f o r d e d an o p p o r t u n i t y f o r h e a r i n g a f t e r reasonable notice.

" ( 2 ) The n o t i c e s h a l l i n c l u d e :

" ( a ) A statement of t h e time, p l a c e and n a t u r e of h e a r i n g .

" ( b ) A statement of t h e l e g a l a u t h o r i t y and j u r i s d i c t i o n under which t h e h e a r i n g i s t o be h e l d .

"(c) A r e f e r e n c e t o t h e p a r t i c u l a r s e c t i o n s of t h e s t a t u t e s and r u l e s involved.

"(d) A s h o r t and p l a i n statement of t h e m a t t e r s asserted. *** " ( 3 ) Opportunity s h a l l be a f f o r d e d a l l p a r t i e s t o respond and p r e s e n t evidence and argument on a l l i s s u e s involved . This s t a t u t e a l s o contains d e t a i l e d requirements f o r t h e record

i n a contested case and provides f o r a stenographic record of t h e

proceedings. The PERS board did not even attempt t o comply with

this statute.

While t h e proceedings i n t h i s case were a t b e s t informal,

t h e PERS board argues t h i s was a contested proceeding w i t h i n t h e

meaning of s e c t i o n 82-4216 which provides f o r j u d i c i a l review of a

" f i n a l decision'.'. It: next argues t h e l e t t e r of May 27, 1975

informing Stowe of i t s d e c i s i o n , should be t r e a t e d f o r purposes

of t h e M P a s a " f i n a l decision". AA While t h e r e i s l i t t l e doubt

t h a t it was a f i n a l d e c i s i o n a s f a r a s t h e PERS board was concerned,

it did n o t comply with t h e requirements of s e c t i o n 82-4213, R.C.M.

1947, a s t o t h e contents of a f i n a l order. That s e c t i o n provides

i n pertinent part:

"(1) A f i n a l d e c i s i o n o r order adverse t o a p a r t y i n a contested case s h a l l be i n w r i t i n g o r s t a t e d i n t h e record. A f i n a l d e c i s i o n s h a l l include f i n d i n g s of f a c t and conclusions of law, s e p a r a t e l y s t a t e d . Findings of f a c t , i f s e t f o r t h i n s t a t u t o r y language, s h a l l be accompanied by a concise and e x p l i c i t statement of t h e underlying f a c t s supporting t h e findings. *** Parties s h a l l be n o t i f i e d e i t h e r personally o r by mail of any decision o r order. Upon r e q u e s t , a copy of t h e d e c i s i o n o r o r - d e r s h a l l be d e l i v e r e d o r mailed f o r t h w i t h t o each p a r t y and t o h i s a t t o r n e y of record."

The l e t t e r , purporting t o be t h e f i n a l order o r d e c i s i o n ,

contained no f i n d i n g s of f a c t , j u s t t h e f i n a l conclusion t h a t

t h e PERS board had r u l e d a g a i n s t Stowe.

I t i s inconceivable under t h e s e circumstances t h a t t h e PERS

board would seek t o hold Stowe t o h i s remedy under t h e Montana

Administrative Procedures Act while t h e r e was not even token com-

p l i a n c e by t h e PERS board. L t i s c l e a r a w r i t of mandate was a proper remedy i n t h i s

c a s e s i n c e t h e PERS board, once i t agreed t o r e i n s t a t e Stowe a s

a member of PERS was r e q u i r e d by s t a t u t e t o s t a r t h i s r e t i r e m e n t

d i s a b i l i t y from t h e d a t e of t h e i n j u r y . Furthermore, t h e PERS

board was estopped t o claim stowe's s o l e remedy was under t h e

MAPA and t h a t t h i s remedy was n o t t i m e l y e x e r c i s e d .

The judgment of t h e d i s t r i c t c o u r t i s r e v e r s e d . Stowe i s

e n t i t l e d t o d i s a b i l i t y r e t i r e m e n t b e n e f i t s from t h e d a t e of i n j u r y .

Attorney f e e s i n t h e amount of $900.00 a r e awarded on t h i s appeal.

The cause i s remanded t o t h e d i s t r i c t c o u r t t o f i x and a s s e s s

a r t o r n e y f e e s f o r proceedings had i n d i s t r i c t c o u r t .

W Concur: e

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Justices. ---.