Opinion ID: 2807039
Heading Depth: 2
Heading Rank: 1

Heading: Mrs. Akers’ Disability Retirement Award

Text: Because the nature of the retirement award at issue necessarily affects the outcome of this case, we first address Mrs. Akers’ appeal through which she challenges the Board’s award of benefits to her pursuant to the disability retirement statute as opposed to the preretirement death statute. Cf. W.Va. Code § 5-10-25 (2013) to W.Va. Code § 5-10-27 (2013). In addressing this issue below, the circuit court determined the Board was required to process the disability retirement application pending at the time of Mr. Akers’ death due 6 to the “mandatory language of W.Va. Code § 5-10-25 and W.Va. Code R. § 162-5-19.2.” The circuit court, in choosing to adopt the Board’s position on this issue, was decidedly misguided. The Board contends that upon the filing of a disability application, the Board is obligated to consider and award a disability retirement if the PERS member qualifies as disabled. As support for its position, the Board emphasizes the introductory language of West Virginia Code § 5-10-25, which provides: “Upon the application of a member of the retirement system . . . any member . . . , who has ten or more years of credited service . . . and who becomes totally and permanently incapacitated for employment . . . , may be retired by the board . . . .” Id. at 25(a) (emphasis supplied). In stating its position, the Board completely disregards the legislative grant of discretion that occurs in that same statutory clause by virtue of the terms “may be retired.” Id. (emphasis supplied). Seeking to downplay its authority to make disability retirement determinations, the Board posits that it lacked discretion to consider an alternate type of retirement award due to the pending disability application. Essentially, the Board suggests it could not allow the disability retirement application to lie in perpetual administrative purgatory as it was mandated to make a disability retirement award notwithstanding the intervening death of Mr. Akers. We find this argument to be wholly lacking in merit. 7 When discussing the Board’s action in response to a member’s application for disability retirement benefits, the Legislature employs the term “may” three separate times. See W.Va. Code § 5-10-25(a). Clearly, there are disability applications that fall outside the realm of undisputed medical certainty in terms of whether a PERS member is incapacitated from employment due to a purported disability. The legislative rules anticipate and address the Board’s authority to deny disability applications. See 162 C.S.R. §§ 2-3.3, 2-4.1 (imposing discretion in Board to deny application where “the member fails to cooperate fully in the examination process” and separately requiring Board to advise applicant in writing of reasons for denial of disability application). In full recognition of the Board’s need for discretion to resolve questionable cases, as well as its duty to review and approve those cases where disability is conclusive, the Legislature granted the Board both the authority and the responsibility for making such determinations. Given the indisputable grant of discretion to make disability determinations, we reject the Board’s position that it lacks discretion to act upon its receipt of a disability retirement application. The Board’s role is more than that of a mindless conduit, necessarily compelled to approve each and every disability application presented to it. Seeking to dispel this grant of decisional discretion, the Board convinced the circuit court that the inclusion of the word “shall” in a legislative regulation enacted after the disability award was issued in this case has effect and is controlling. Neither contention 8 is correct. As part of its ruling, the circuit court expressly relied upon a legislative rule–162 C.S.R. § 5-19.2. Because that rule took effect on April 12, 2010, subsequent to the Board’s grant of disability retirement to Mrs. Akers on March 3, 2010, it is clearly inapplicable to the Board’s disability determination. Even if the rule had been in effect at the time of the disability award, the word “shall” is used to refer to the prompt administrative handling of a disability application. The rule requires that “[u]pon receipt of properly executed forms submitted by the disability retirant . . . , the Board shall process the disability retirement annuity as soon as administratively feasible.” Id. Critically, nothing in the directive to expediently administer applications serves to negate the discretion statutorily reposed in the Board to consider a disability application in the first instance.12 Having rejected the circuit court’s conclusion that the Board was mandated to make an award of disability retirement, we proceed to consider whether the Board should have awarded a preretirement death annuity in lieu of the disability annuity issued in this case. In stark contrast to the disability retirement statute, the preretirement death statute is 12 We further observe that the inclusion of “shall” within 162 C.S.R. § 5-19.2 does not serve to abrogate the statutory directives contained in West Virginia Code § 5-10-27(b)(1). If the Board had hoped to circumscribe the perceived “tension” between sections twenty-five and twenty-seven, the new rule does not accomplish this objective. Cf. W.Va. Code §§ 5­ 10-25, -27(b)(1). Whereas an immediate and automatic entitlement to a survivor’s annuity in the event of death exists under West Virginia Code § 5-10-27(b)(1), there is no correspondent statutory entitlement to a disability retirement upon the event of death during the disability application process or upon an application without an intervening death. 9 decidedly framed in mandatory terms. Pursuant to West Virginia Code § 5-10-27(b)(1), the Legislature has directed that when a member having ten or more years of credited service “[d]ies; and leaves a surviving spouse, the surviving spouse shall immediately receive an annuity computed in the same manner in all respects as if the member had: (A) Retired the day preceding the date of his or her death . . . .” Id. (emphasis supplied).13 This statute, unlike West Virginia Code § 5-10-25, clearly requires the Board to adhere to legislativelyspecified imperatives. See W.Va. Code § 5-10-27(b)(1). Of particular import to Mrs. Akers is the fact that she would have received a larger award if the Board had issued her annuity as a preretirement death annuity. Because Mr. Akers had been a member of PERS for thirty years at the time of his death, the preretirement death annuity would have applied those thirty years to the statutory multiplier of two percent14 in calculating the amount of the annuity award. Under the disability retirement statute, the maximum basis for an annuity award is fifty percent of the retirant’s 13 The statute contemplates that a spouse may execute a waiver of the preretirement death benefits in advance of the participant’s death. Provided the waiver has been properly executed and accepted by the Board, the PERS participant is permitted to identify in his or her spouse’s stead, “a beneficiary who has an insurable interest in the member’s or former member’s life.” W.Va. Code § 5-10-27(b)(1). 14 See W.Va. Code § 5-10-22(a) (2013) (providing that PERS members retiring after 1970 shall receive straight life annuity equal to two percent of their final average salary multiplied by years of credited service). 10 final average salary and the award terminates at age sixty-five.15 See W.Va. Code § 5-10­ 25(c). If the Board had proceeded under the preretirement death annuity statute, Mrs. Akers would have received an annuity award based on sixty percent of Mr. Akers’ final average salary rather than fifty percent. In an attempt to convince us that proceeding under the disability retirement statute was proper, the Board contends that beneficiaries of PERS members who die while a disability application is pending typically will receive a larger award under the disability retirement statute than if the award is made under the preretirement death annuity statute. Unlike Mr. Akers who had a lengthy period of employment before experiencing disability, the Board submits that most PERS employees have significantly fewer years of service when applying for disability benefits. We find this contention rooted in policy-based concerns that are expressly reserved to the Legislature.16 At present, the legislative position on this issue is crystal clear: Mrs. Akers, as the surviving spouse, was entitled to receive a preretirement death annuity. Pursuant to the provisions of West Virginia Code § 5-10-27(b)(1), a 15 Had Mr. Akers been alive and receiving disability retirement benefits, those benefits would have ceased under the statute upon his attainment of age sixty-five. According to testimony provided by Anne Lambright, the former executive director of the Board, the disability retirement award would have converted to a regular retirement at age sixty-five. 16 Anne Lambright testified that the tax consequences of a disability survivor annuity are more favorable than those which attach to a preretirement death annuity. We find this justification for the Board’s selection between the two statutes (W.Va. Code §§ 5-10-25, 27(b)(1)) to be policy based and, similarly, a decision that is better left to the Legislature. 11 surviving spouse of a participant in PERS with ten or more years of credited service, who is entitled to a deferred annuity under West Virginia Code § 5-10-21 (2013), shall, barring a previously-executed spousal waiver, immediately receive a preretirement death annuity. Having concluded that the Board lacked the necessary discretion to circumvent the statutory directives of West Virginia Code § 5-10-27(b)(1), we reverse the trial court’s ruling that a disability retirement annuity was properly issued to Mrs. Akers.17 Upon referral to the Board for issuance of a preretirement death annuity, the relief to be awarded in terms of structuring and awarding the corrected annuity payments to Mrs. Akers is prospective only. Furthermore, Mrs. Akers is under no obligation to return any of the annuity funds she has received to date from the Board.18 17 Given our decision that the award should have been made under the preretirement death annuity statute, we find it unnecessary to address whether the grant of the disability retirement award was improper based on its posthumous issuance. When the Board made the award to Mrs. Akers, there was no basis for a posthumous award; posthumous awards are now authorized by legislative rule pursuant to amendments that took effect on July 6, 2012. See 162 C.S.R. § 2-4 (providing that Board “shall process the disability application and pay benefits as though the applicant were still alive and elected a 100% Joint & Survivor disability annuity naming his or her surviving spouse” if applicant dies during processing of disability application). However, even if the amended rule were in effect, we remain convinced that the preretirement death annuity statute necessarily trumps the disability retirement statute due to the mandatory language of West Virginia Code § 5-10-27(b)(1). 18 The Board has a pending cross-claim against Mrs. Akers for the return of the disability retirement funds upon a determination that it wrongly paid her such funds. 12