Title: STATE EX REL STOWE v BOARD OF ADMI

State: montana

Issuer: Montana Supreme Court

Document:

N o . 1 3 2 7 4 I N THE SUPREME COURT OF THE STATE O F MONTANA 1 9 7 7 STATE OF MONTANA ex rel. DANIEL J. STCPJE, P e t i t i o n e r , BOARD O F ADNINISTRATION OF THE P U B L I C EMPLOYEES RETIREMENT D I V I S I O N AND FRED BARRETT, W.M. COCALES, FRED L . H I L L , JOHN L . P R E B I L , and KEVIN J. SHANNON, M e m b e r s thereof, R e s p o n d e n t s . A p p e a l f r o m : 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 argued and Joseph M a s s m a n appeared, H e l e n a , M o n t a n a For R e s p o n d e n t s : S t u a r t K e l l n e r , Special A s s i s t a n t A t t o r n e y , argued, H e l e n a , M o n t a n a M i c h a e l J. H u g h e s , H e l e n a , M o n t a n a S u b m i t t e d : January 1 7 , 1 9 7 7 D e c i d e d : M-AY 1 1 1977 F i l e d : HA^ 1 $gli M r . J u s t i c e Daniel J. Shea delivered the Opinion of the Court. Daniel Stowe, a member of the Montana Public Employees' Retirement System (PEKS), appeals from a judgment of the d i s t r i c t court, Lewis and Clark County, dismissing h i s p e t i t i o n f o r a w r i t of mandate directed against the board of administration of PEKS . The d i s t r i c t court held t h a t Stowe had a remedy of j u d i c i a l review under the Montana Administrative Procedure Act (MAPA) but l o s t it by not petitioning f o r review within the s t a t u t o r y 30 days. Although not required t o do so i n l i g h t of its ruling on the motion t o dismiss, the d i s t r i c t court a l s o ruled on the merits of the claim. The court held t h a t when an employee under PEKS i s readmitted t o PERS f o r the purpose of obtaining d i s a b i l i t y benefits, the PERS board has the r i g h t t o determine the date when the benefits s h a l l commence. Stowe appeals from both rulings. O n 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 the course of h i s work a s an employee of the 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 disabled. After receiving c r e d i t f o r accrued vacation time and sick leave, Stowe's employment was terminated on November 13, 1972. O n November 20, 1972, Stowe was given an application f o r a refund of h i s contribu- tions t o the PERS during h i s employment by the c i t y of Helena. H e was not t o l d , and he did not know, he had a r i g h t t o apply f o r a d i s a b i l i t y retirement allowance. Stowe signed the application f o r a refund of h i s PERS contributions and upon receiving h i s contributions of $889.77, he l o s t a l l membership benefits under PEKS. Section 68-1603, R.C.M. 1947, of the Public Employees' Ketirement Act provides: " I f any part of a member's accumulated normal contributions a r e refunded pursuant t o section 68- 1905, he ceases t o be a member and a l l membership service 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 . ceases t o be a member. 11 Seztion 68-1905, R.C.M. 1947, permits a refund of contributions, i f a member's service i s discontinued because of d i s a b i l i t y . In February 1975, Stowe applied t o the PERS board f o r rein- statement i n the PERS and submitted a claim f o r d i s a b i l i t y retirement 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 the condition t h a t Stowe redeposit the amount of h i s PERS contributions withdrawn, together with accrued i n t e r e s t on t h i s amount. Stowe deposited t h i s money on March 28, 1975 and the PERS board determined h i s d i s a b i l i t y benefits would s t a r t from the-date of deposit. Upon making h i s deposit however, Stowe simultaneously requested t h a t benefit pay- ments r e l a t e back t o the date of the injury (October 25, 1972) and requested a hearing a f t e r he f i l e d the necessary information and documentation. I n support of h i s claim i n early April 1975, Stowe submitted t o the PERS board a p e t i t i o n and several a f f i d a v i t s and again s p e c i f i c a l l y requested an opportunity t o appear before the PERS board should it have any questions r e l a t i n g t o h i s claim. The PERS board a t no time indicated it had any question o r t h a t it was disposed t o a c t adversely t o Stowe's p e t i t i o n f o r benefits from the date of injury. Under these circumstances one could conclude the PERS board had decided t o a c t favorably on the p e t i t i o n , otherwise it would have given Stowe a hearing. Without \ I , granting a hearing d a t e , the PERS board met on May 9, 1975, and ruled against Stowets,petition. He was informed of i t s decision by l e t t e r dated May 27, 1975. Stowe commenced action on July 1 7 , 1975, f o r a w r i t of man- damus t o compel the PERS board t o s t a r t payment of d i s a b i l i t y payments from the date of injury. F i r s t we consider whether the PERS board had discretion t o s t a r t stowe's d i s a b i l i t y retirement allowance on March 28, 1975, the date of h i s reinstatement a s a member of the PERS. Section 68-2102, R.C.M. 1947, s t a t e s i n pertinent p a r t : "* * * The retirement allowance payable t o a member who has become disabled s h a l l commence on the day following t h e member's l a s t day of membership service." (Emphasis added.) Stowe claims t h i s s t a t u t e deprives the PERS board of any dis- cretion. The board argues t h i s s t a t u t e does not apply t o a dis- abled person who has been reinstated a f t e r previously terminating h i s membership i n the PERS under section 68-1603. The PERS board argues there a r e no statutory provisions which s p e c i f i c a l l y allow a disabled person t o be reinstated t o membership under PERS, without simultaneously being readmitted t o the work force a s an employee. Since Stowe was not readmitted t o the work force, but only t o membership i n PERS, it argues the PERS board accordingly has broad discretion a s t o when h i s benefits a r e t o commence. The board r e l i e s on two s t a t u t e s , section 68-1601(2) and section 68-1803 (I), R.C.M. 1947. Section 68-1601(2), r e f e r s t o re-entering employment and provides i n pertinent part: "Every employee who re-enters service s h a l l become a member unless he has had an o r i g i n a l election of exemption from membership and h i s service was not interrupted by a break of more than one (1) month. * * *" (Emphasis added.) Section 68-1803(1) covers the authority of PERS and provides i n pertinent part: "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 section, any person who again becomes a member subsequent t o the refund of h i s accumulated normal contributions a f t e r a termination of previous membership i s con- sidered a new member without c r e d i t f o r any previous membership service, and he may r e i n s t a t e t h a t membership service by redepositing the sum of the accumulated normal contributions which were refunded t o him a t the l a s t termination of h i s membership plus the i n t e r e s t which would have been credited t o h i s account had the refund not taken place. I f he makes t h i s redeposit, h i s membership s h a l l be the same a s i f unbroken by such l a s t termina- t i o n , * * *" (Emphasis added.) Reading the s t a t u t e s together it i s c l e a r the words i n section 68-2102 encompass a l l members, including disabled persons who have been reinstated. This is 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 section 68-1501, R.C.M. 1947, t o provide a means of providing replacements f o r incapacitated employees in the public service without hardship o r prejudice t o the incapa- c i t a t e d employee. Section 68-2102 leaves no room f o r t h e exercise of discretion. Stowe i s e n t i t l e d t o a d i s a b i l i t y retirement allowance commencing on the day following h i s l a s t day of membership service. W e note t h i s s i t u a t i o n would never have occurred i f Stowe had been f u l l y informed of h i s options a t the time of h i s accident. H e could then have made a knowing election. Instead, he was handed an application f o r a return without notice 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 retirement allowance, thereby greasing the wheels f o r h i s l o s s of r i g h t s under PERS. Such practice works a complete f r u s t r a t i o n of the l e g i s l a t i v e w i l l and serves only t o undermine confidence i n the administrative 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 claim by not appealing t o the d i s t r i c t court within the statutory 30 days provided i n the MAPA, section 82-4216(2), R,C.M. 1947. There is no question t h a t Stowe did not f i l e an action within the s t a t u t o r y time l i m i t s , but under the circumstances here, we hold the PERS board i s estopped from claiming Stowe had a duty t o use M A P A a s h i s sole remedy. To hold otherwise would be t o hold Stowe t o h i s remedy under M A P A , under circumstances where the PERS board a t no time indicated it was bound by and acting pursuant t o the M A P A . Such a holding would be manifestly unfair. When Stowe f i r s t applied f o r d i s a b i l i t y benefits s t a r t i n g on the day of h i s injury, he asked f o r a hearing should the PERS board have any questions concerning h i s position. When Stowe f i l e d h i s p e t i t i o n along with supporting a f f i d a v i t s and papers, he again asked f o r a hearing should there be any questions. The PERS board did not reply t o e i t h e r request and proceeded t o a determination of h i s r i g h t s without a hearing. Notice and hearing a r e specifically.provided'for under section 8& a-4209, R.C.M.1947. It s t a t e s i n relevant part: "(1) I n a contested case, a l l p a r t i e s s h a l l be afforded an opportunity f o r hearing a f t e r reasonable notice. "(2) The notice s h a l l include: "(a) A statement of the time, place and nature of hearing. "(b) A statement of the l e g a l authority and jurisdiction under which the hearing is t o be held. "(c) A reference t o the p a r t i c u l a r sections of the s t a t u t e s and rules involved. "(d) A short and p l a i n statement of the matters asserted. * * * " ( 3 ) Opportunity s h a l l be afforded a l l p a r t i e s t o respond and present evidence and argument on a l l issues involved . This statute also contains detailed requirements for the record in a contested case and provides for a stenographic record of the proceedings. The PERS board did not even attempt t o comply with t h i s statute. While the proceedings i n t h i s case were a t best informal, the PERS board argues t h i s was a contested proceeding within the meaning of section 82-4216 which provides for judicial review of a "final decision'.'. It: next argues the l e t t e r of M a y 27, 1975 informing Stowe of i t s decision, should be treated for purposes of the M A P A as a "final decision". While there i s l i t t l e doubt that it was a f i n a l decision as f a r as the PERS board was concerned, it did not comply with the requirements of section 82-4213, R.C.M. 1947, as t o the contents of a f i n a l order. That section provides i n pertinent part: "(1) A f i n a l decision or order adverse t o a party i n a contested case shall be in writing or stated i n the record. A f i n a l decision shall include findings of fact and conclusions of law, separately stated. Findings of f a c t , i f set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings. * * * Parties shall be notified either personally or by mail of any decision or order. Upon request, a copy of the decision o r or- der s h a l l be delivered or mailed forthwith to each party and t o h i s attorney of record." The l e t t e r , purporting t o be the f i n a l order o r decision, contained no findings of f a c t , just the f i n a l conclusion that the PERS board had ruled against Stowe. It i s inconceivable under these circumstances that the PERS board would seek t o hold Stowe to h i s remedy under the Montana Administrative Procedures Act while there was not even token com- pliance by the P E R S board. L t is c l e a r a w r i t of mandate was a proper remedy i n t h i s case since the PERS board, once it agreed t o r e i n s t a t e Stowe a s a member of PERS was required by s t a t u t e t o s t a r t h i s retirement d i s a b i l i t y from t h e date of the injury. Furthermore, the PERS board was estopped t o claim stowe's sole remedy was under the MAPA and t h a t t h i s remedy was not timely exercised. The judgment of the d i s t r i c t court i s reversed. Stowe i s e n t i t l e d t o d i s a b i l i t y retirement benefits from the date of injury. Attorney fees i n the amount of $900.00 a r e awarded on t h i s appeal. The cause i s remanded t o the d i s t r i c t court t o f i x and assess artorney fees f o r proceedings had i n d i s t r i c t court. W e Concur: / 1-7 '-' C- */ ' k . / f , ~ i ~ ? , ~ & L P Chief J u s t i c e I 1 Justices. ---.