Court Opinion

ID: 6344799
Source: CourtListenerOpinion
Date Created: 2022-05-27 14:05:23.763839+00
Date Added: 2024-06-11T09:02:54.551642
License: Public Domain

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.

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             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

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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

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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

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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

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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

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“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

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