Title: State ex rel. Plavcan v. School Emp. Retirement Sys. of Ohio

State: ohio

Issuer: Ohio Supreme Court

Document:

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The State ex rel. Plavcan, Appellee, v. School Employees                         
Retirement System of Ohio, Appellant.                                            
[Cite as State ex rel. Plavcan v. School Emp. Retirement Sys.                    
of Ohio (1994),       Ohio St. 3d      .]                                        
Schools -- Public School Employees Retirement System --                          
Retirement --                                                                    
     Disability coverage -- R.C. 3309.39, construed.                             
     (No. 93-2532 -- Submitted October 24, 1994 -- Decided                       
December 20, 1994.)                                                              
     Appeal from the Court of Appeals for Franklin County, No.                   
93AP-324.                                                                        
     Effective July 29, 1992, the General Assembly amended                       
state public employee retirement law regarding disability                        
benefits.  Am. S.B. No. 346 of the 119th General Assembly.                       
This case involves changes to the law affecting the appellant,                   
School Employees Retirement System of Ohio ("SERS"), insofar as                  
Am. S.B. No. 346 provided disability benefits to persons sixty                   
and over.                                                                        
     Before July 29, 1992, persons sixty and over could not                      
receive disability benefits from SERS.  See former R.C.                          
3309.39.  However, Am. S.B. No. 346 required SERS to cover such                  
members who have at least five years of service credit.  The                     
bill did not expressly declare that it was retroactive, nor did                  
it enact a new application procedure for those sixty and over                    
to obtain this new benefit.  Instead, it amended the procedure                   
for application and eligibility for persons under sixty and                      
applied it to persons sixty and over.  (See R.C. 3309.39, as                     
amended by Am. S.B. No. 346, infra.)  The procedure allows                       
application for disability benefits to be made for up to two                     
years after the member's last "contributing service"                             
(apparently meaning service during which contributions were                      
paid to SERS), and further provides that upon a finding of                       
disability, benefit payments begin the first day of the month                    
following the month during which compensation was last paid or                   
the member was first incapacitated, whichever is later.  R.C.                    
3309.39(B) and (D).                                                              
     Appellee, Lillian Plavcan, was a member of appellant SERS                   
with over five years service credit on July 29, 1992, when Am.                   
S.B. No. 346 took effect.  She applied for disability benefits                   
on October 1, 1992, some two months later.  On November 2,                       
1992, SERS's medical examiner stated that appellee had become                    
incapacitated in December 1991, i.e., some seven months before                   
Am. S.B. No. 346's effective date, which was also the same                       
month she became sixty.  She last received compensation for                      
work in January 1992, which presumably was also her last                         
contributing service, and was some six months before Am. S.B.                    
346's effective date, but well within the two years prior to                     
the application for benefits.                                                    
     SERS began paying benefits to the appellee on August 1,                     
1992, the first day of the first month after Am. S.B. No. 346                    
took effect, rather than February 1, 1992, the first day of the                  
month following the last day she received compensation, as                       
required by literal compliance with R.C. 3309.33(B)(1).                          
Appellee sought a writ of mandamus to compel SERS to pay                         
benefits effective February 1, 1992, and the court of appeals                    
allowed the writ, holding that Am. S.B. No. 346 was intended to                  
have retroactive effect to permit persons over sixty to apply                    
for disability benefits in conformity with the federal Older                     
Workers Benefit Protection Act of 1990.                                          
     SERS brings this appeal as of right.                                        
                                                                                 
     Martin, Pergram, Browing & Parker Co., L.P.A., Robin L.                     
Parker and James M. Detz, for appellee.                                          
     Lee Fisher, Attorney General, and Christopher S. Cook,                      
Assistant Attorney General, for appellant.                                       
                                                                                 
     Per Curiam.  We affirm the decision of the court of                         
appeals for the following reasons.                                               
     As amended by Am. S.B. No. 346, effective July 29, 1992,                    
R.C. 3309.39 states in pertinent part:                                           
     "Sec. 3309.39(A) The school employees retirement system                     
shall provide disability coverage to each member who has at                      
least five years of total service credit.                                        
     "Not later than October 16, 1992, the school employees                      
retirement board shall give each person who is a member on the                   
effective date of this amendment [July 29, 1992] the                             
opportunity to elect disability coverage either under section                    
3309.40 of the Revised Code or under section 3309.401 of the                     
Revised Code.                                                                    
     "* * *                                                                      
     "(B) Application for a disability benefit may be made by a                  
member, by a person acting in the member's behalf, or by the                     
member's employer, provided the member has at least five years                   
of total service credit and has disability coverage under                        
Section 3309.40 or 3309.401 of the Revised Code.* * *                            
The benefit payable to any member who is approved for a                          
disability benefit shall become effective on the first day of                    
the month next following the later of the following:                             
     "(1)  The last day for which compensation was paid;                         
     "(2)  The date on which the member was first incapacitated                  
by the disabling condition.                                                      
     "* * *                                                                      
     "(D)  Application for a disability benefit must be made                     
within two years from the date the member's contributing                         
service terminated.* * *"                                                        
     In its first proposition of law, SERS argues that R.C.                      
3309.39 should not be applied retroactively because that would                   
provide for payments that were not authorized until July 29,                     
1992, Am. S.B. No. 346's effective date.  This argument invokes                  
R.C. 1.48, which states in part:                                                 
     "A statute is presumed to be prospective in its operation                   
unless expressly made retrospective."                                            
     In Van Fossen v. Babcock & Wilcox Co.(1988), 36 Ohio St.3d                  
100, 522 N.E.2d 489, paragraph one of the syllabus, this court                   
stated in part:                                                                  
     "Upon its face, R.C. 1.48 establishes a threshold analysis                  
which must be utilized prior to inquiry under Section 28,                        
Article II of the Ohio Constitution [constitutionally                            
prohibited retroactivity]."                                                      
     The court of appeals held that although Am. S.B. No. 346                    
contained no express provision concerning retroactivity, it was                  
"obvious" that the bill was intended to comply with the federal                  
Older Workers Benefit Protection Act "at the first available                     
time."  The court of appeals apparently, though not expressly,                   
based this conclusion on Section 5 of Am. S.B. No. 346, the                      
necessitated by the federal act, "which requires that state                      
retirement systems amend by October 16, 1992, any disability                     
benefit law that discriminates among system members on the                       
basis of age."                                                                   
     The federal act was not otherwise cited or entered into                     
evidence in the court of appeals.  SERS attaches a copy of the                   
act and some excerpts from the Congressional Record concerning                   
the act to its appellate brief, and both parties refer to the                    
federal act in their briefs.  However, these materials are                       
outside the record.  States apparently had to comply with the                    
federal law by October 16, 1992 (Section 5 of Am. S.B. No.                       
346), but this did not prove that retroactivity of state laws                    
was required.  Accordingly, we decline to affirm the court of                    
appeal's decision on grounds that the federal act required                       
retroactivity.                                                                   
     Upon further examination, however, we conclude that R.C.                    
3309.39, as amended by Am. S.B. No. 346, is not retroactive;                     
rather, it confers present eligibility for benefits based on                     
examination of past events.  A member of the system has up to                    
two years after "contributing service" ends to apply for                         
benefits.  Disability determination necessarily takes place                      
after application and thus in the present, although the timing                   
of benefits payments is related back to the date of the first                    
incapacity or the date the applicant last received                               
compensation, whichever is later.  Statutes that reference past                  
events to establish current status have been held not to be                      
retroactive.  In State ex rel. Bouse v. Cickelli (1956), 165                     
Ohio St. 191, 59 O.O. 261, 134 N.E.2d 834, we denied a                           
candidate for Congress a place on the 1956 Democratic primary                    
ballot because of former R.C. 3513.191, which, as amended                        
effective January 1, 1956, prohibited a candidacy if the                         
candidate had voted in another party's primary within the                        
previous four calendar years.  The candidate had voted in the                    
Republican primary in 1952.  Before January 1, 1956, the law                     
had placed only a two-year restriction on such voting.  The                      
candidate sought a writ of mandamus compelling his name to be                    
placed on the ballot.  We held:                                                  
     "It [R.C. 3513.191] is not retroactive simply because the                   
test involves a time factor extending prior to the effective                     
date of the amendment.  The test is to be applied to future                      
cases, i.e., cases after its effective date."  165 Ohio St. at                   
192, 59 O.O. at 262, 134 N.E.2d at 835.                                          
     Similarly, eligibility under R.C. 3309.39 is not being                      
retroactively conferred; it is established in the present based                  
on past events, just as disqualification in Bouse was based on                   
past events.  Therefore, there was no need to comply with R.C.                   
1.48, nor is there any constitutional question of retroactivity                  
under Section 28 of Article II, Ohio Constitution.                               
     Nor do we view the payments due to appellee as being                        
retroactive.  Appellee's "benefit payable" date under R.C.                       
3309.39(B) was February 1, 1992, some six months before Am.                      
S.B. No. 346 became effective.  However, that right flows from                   
a current right to apply and a current computation of                            
eligibility for benefits.  We find it immaterial that the right                  
to the benefits stretches back to a prior date so long as                        
eligibility and the right to payment are conferred as present                    
rights.  R.C. 3309.01(O)(1) defines "benefit" as:                                
     "* * * a payment, other than a retirement allowance or the                  
annuity paid under section 3309.341 of the Revised Code,                         
payable from the accumulated contributions of the member or the                  
employer, or both, under this chapter and includes a disability                  
allowance or disability benefit."                                                
     R.C. 3309.01(O)(2) defines "disability allowance" as an                     
allowance payable under R.C. 3309.401, which is the statute                      
appellee qualified under.  R.C. 3309.401 states in part:                         
     "* * * The allowance shall be an annual amount equal to                     
the greater of the following:                                                    
     "(1) Forty-five per cent of the member's final average                      
salary;                                                                          
     "(2) The member's total service credit multiplied by two                    
and one-tenth per cent of his final average salary, not                          
exceeding sixty per cent of his final average salary."                           
(Emphasis added.)                                                                
     Thus, the allowance is computed as an "annual amount"                       
relative to the present.  We hold that this establishes a                        
present right to payment, based on past events.  If the right                    
to receive certain benefits is a present right, it is not                        
retroactive because it references past events.  Bouse, supra.                    
     SERS argues that Smith v. Ohio Valley Ins. Co. (1971), 27                   
Ohio St.2d 268, 56 O.O.2d 160, 272 N.E.2d 131, supports its                      
contention that payment of benefits for a period prior to a                      
bill's effective date must constitute retroactive law which the                  
General Assembly must identify as such in order to comply with                   
R.C. 1.48.  In that case, the Ohio Valley Insurance Company was                  
found without sufficient assets to discharge its liabilities                     
after December 31, 1969, giving rise to certain claims against                   
it.  On August 12, 1970, the Ohio Superintendent of Insurance                    
filed suit against Ohio Valley.  Effective September 4, 1970,                    
the General Assembly enacted the Ohio Insurance Guaranty                         
Association Act ("OIGA"), which provided a fund for paying                       
claims brought against insolvent insurance companies that were                   
decreed by a court to be insolvent and ordered to be                             
liquidated.  The fund was created from assessments against                       
other insurers.  On November 27, 1970, the common pleas court                    
declared Ohio Valley insolvent and ordered it liquidated.                        
     Claimants whose claims arose prior to September 4, 1970,                    
OIGA's effective date, sought payment from the fund.  The trial                  
court held that the fund was available to pay all claims, those                  
arising before and after the effective date of the act.  The                     
court of appeals held that the act was indeed retroactive as to                  
claims arising before September 4, 1970, and was therefore                       
unconstitutional to that extent, but was not retroactive as to                   
claims arising between September 4 and November 27, 1970, the                    
date the insolvency was judicially declared.                                     
     We affirmed the judgment of the court of appeals, but not                   
on constitutional grounds.  Rather, we held that OIGA applied                    
only to "covered claims," a defined term applicable to only                      
claims against insurance companies that became insolvent on and                  
after the effective date of the act.  Thus, the court found a                    
statutory basis for limiting claims to those arising only on                     
and after the act's effective date.                                              
     In the instant case, there is no statute to indicate                        
prospectivity only and limit benefits to those accruing after                    
the bill's effective date.  Thus, Smith fails to support SERS's                  
contentions in this regard.                                                      
     Finding that appellee has established a present right to                    
payment as of February 1, 1992, we affirm the decision of the                    
court of appeals, but upon different reasoning.                                  
                                     Judgment affirmed.                          
     Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E.                   
Sweeney and Pfeifer, JJ., concur.