Perfetto v. Employees' Retirement System of State, 050520 RISUP, PC-2017-1767

Docket Nº:PC-2017-1767
Opinion Judge:K. RODGERS, J.
Attorney:For Plaintiff: Lauren E. Jones, Esq. For Defendant: Michael P. Robinson, Esq.; John H. McCann, Esq.
Case Date:May 05, 2020
Court:Superior Court of Rhode Island




No. PC-2017-1767

Superior Court of Rhode Island, Providence

May 5, 2020

For Plaintiff: Lauren E. Jones, Esq.

For Defendant: Michael P. Robinson, Esq.; John H. McCann, Esq.



Before this Court is Robert Perfetto's (Appellant or Perfetto) appeal from a decision of the Employees' Retirement System of Rhode Island (Appellee or ERSRI) denying Appellant's request to have a lump sum of back-pay that he received in 2010 included as compensation for the purpose of determining his monthly retirement benefits upon his retirement from state service in 2013. The ERSRI found that the lump-sum payment was back-pay for the 2008-2009 academic year, and therefore, it was not "earned and paid for the performance of duties" during the statutorily defined three-year period used to calculate Appellant's retirement benefits, resulting in a lower monthly pension benefit than Appellant expected.

Jurisdiction is pursuant to G.L. 1956 §§ 42-35-15, et seq. For the reasons that follow, the ERSRI's decision is affirmed.


Facts and Travel

Perfetto began working for the State of Rhode Island in 1987, spending most of his career as a teacher at the Davies Career and Technical School. In 2007, Appellant was laid off from his State employment. Believing that he was exempt from being laid off, Appellant brought suit against the State. See Robert Perfetto v. Rhode Island Department of Administration, et al., C. A. No. PC-2009-2428. While that suit was pending, Appellant returned to work for the State on July 27, 2009, at the Rhode Island Training School (Training School) as an Administrator, later becoming an Assistant Principal. Appellant and the State settled that civil action in 2010 pursuant to a Consent Order dated June 23, 2010 (the 2010 Consent Order), which provided as follows: "[Perfetto] shall receive back pay in the amount of $55, 775. This sum is based on the total annual salary that [Perfetto] had received at the William M. Davies, Jr. Career-Technical High School ("Davies") during the 2007-08 school year, plus additional sums that would have been paid to him during the 2008-09 school year, plus his out-of-pocket medical expenses for the 2008-09 school year, minus sums and benefits [Perfetto] had received in payment during the 2008[-]09 school year[.]" See Admin. R. 00135.

Thereafter, Appellant received the $55, 775 as a lump sum and paid taxes on it that same year.1

Appellant continued in his employment at the Training School until he began to consider retiring in 2013. Appellant met with ERSRI's Retirement Benefit Analyst, John Midgely (Midgely), on April 2, 2013. At that meeting, Appellant provided Midgely with a copy of the 2010 Consent Order. Midgely accessed the State's payroll records in order to provide Appellant an estimate of his monthly retirement benefits based on a calculation of Appellant's three-year average compensation if Appellant retired on August 1, 2013.2 At that time, the State's payroll records reflected that the $55, 775 lump-sum back-payment was credited to Appellant's 2010 wages. The wages used to calculate Appellant's estimated retirement benefit derived from part of 2010, all of calendar years 2011 and 2012, and part of 2013, as set forth in an "Estimate of Benefits" form prepared by Midgely.[3] Admin. R. 00115. The second page of that "Estimate of Benefits" form calculated Appellant's monthly retirement benefit to be $6617.05. Admin. R. 00116. Midgely prepared, signed and dated an "Application for Retirement" form, which Appellant would need if he decided to retire, along with an "Option Selection Form" which Midgely also prepared and provided to Appellant on April 2, 2013. Admin. R. 00113-00114, 00117; see also Admin. R. 00127-00129. The "Option Selection Form" specified a "Service Retirement Allowance" of $79, 404.60, Admin. R. 00117, which calculates out to be the same monthly benefit of $6617.05.

Appellant elected to retire on August 1, 2013. On July 9, 2013, Appellant completed and submitted to the ERSRI the "Application for Retirement" form and "Option Selection Form" which Midgely had provided to him at the April meeting. It is undisputed that the consecutive three-year period in which Appellant's compensation was the highest was the three years (or seventy-eight bi-weekly pay periods) immediately preceding his August 1, 2013 retirement; namely, from August 1, 2010 until July 31, 2013. See Admin. R., at 002, 0051, 00119.

One month after he retired, Appellant received his first monthly retirement benefits check for $5580.52, which was $1036.53 less than Midgely's original estimation. Appellant inquired with the ERSRI about the reduced monthly payments. In a letter dated October 2, 2013, Midgely explained the discrepancy as follows: "[T]he reason it was higher on the estimate was because of the $55, 000 [sic] retroactive payment that was posted to your account by State payroll under 2010, when it should have been posted under 2009, since that's the year the payment was meant for, according to documentation in your file. I did notice this when I calculated your actual benefit, and was required to make the adjustment; I did not realize that the amount was included in your estimate." Admin. R. 002.

Appellant petitioned the ERSRI to reinstate the original retirement benefits amount that Midgely calculated and included in his "Estimate of Benefits" and "Option Selection Form" that was included as part of the "Application for Retirement" form prepared by Midgely.[4] On June 20, 2014, the ERSRI's Executive Director, Frank Karpinski, denied Appellant's petition. Appellant then requested that his petition be reviewed by an ERSRI Retirement Board hearing officer (Hearing Officer) in accordance with Section 3 of ERSRI's Regulation 4, Rules of Practice and Procedure for Contested Hearings.5 A hearing was held on September 26, 2014, at which Appellant and the ERSRI's Executive Director testified before the ERSRI Hearing Officer. The Hearing Officer upheld the ERSRI's Executive Director's denial of Appellant's petition, finding that Appellant was entitled to receive only $5580.52 in monthly retirement benefits payments, the lower amount which excluded the retroactive payment from the 2010 Consent Order in the monthly benefit calculation.

Appellant then appealed the Hearing Officer's decision to the ERSRI's full Retirement Board. A letter was sent to Appellant on March 22, 2017 informing him that the ERSRI's Retirement Board voted to accept the Hearing Officer's decision. Having exhausted all administrative remedies, Appellant timely appealed the ERSRI's decision to this Court on April 19, 2017.

II Standard of Review

Section 42-35-15(g) of the Administrative Procedures Act (APA) establishes this Court's appellate jurisdiction to review final decisions issued by state administrative agencies. See McAninch v. State of Rhode Island Department of Labor & Training, 64 A.3d 84, 87 (R.I. 2013). Pursuant to § 42-35-15(g), "[t]he court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings, or it may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

"(1) In violation of constitutional or statutory provisions;

"(2) In excess of the statutory authority of the agency;

"(3) Made upon unlawful procedure;

"(4) Affected by other error of law;

"(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

"(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion." Section 42-35-15(g).

In reviewing an administrative agency's decision, "[q]uestions of law determined by the administrative agency are not binding upon [the court] and may be freely reviewed to determine the relevant law and its applicability to the facts presented in the record." State, Department of Environmental Management v. State Labor Relations Board, 799 A.2d 274, 277 (R.I. 2002) (citing Carmody v. Rhode Island Conflict of Interest Commission, 509 A.2d 453, 458 (R.I. 1986)). Notwithstanding this Court's authority to afford great deference to an administrative agency's factual findings, '"questions of law-including statutory interpretation-are reviewed de novo.'"

McAninch, 64 A.3d at 86 (quoting Heritage Healthcare Services v. Marques, 14 A.3d 932, 936 (R.I. 2011)). This Court can vacate an administrative decision based on errors of law. Rhode Island Temps, Inc. v. Department of Labor & Training, Board of Review, 749 A.2d 1121, 1125 (R.I. 2000) (quoting Environmental. Scientific Corp. v. Durfee, 621 A.2d 200, 208 (R.I. 1993)).



The issue before this Court is whether the Retirement Board erred by accepting the Hearing Officer's finding that Appellant's three-year average compensation from 2010-2013 does not include the $55, 775 of back-pay that Appellant received in 2010 for the purpose of determining Appellant's actual retirement benefits. Specifically, this Court must determine whether Appellant is entitled to receive monthly retirement benefit payments of $6617.05, as Midgely indicated in his original calculation from the April 2, 2013 meeting, or $5580.52 per month as calculated without the lump-sum back-pay included in the three-year average.

Appellant contends that the ERSRI's findings and conclusions contain errors of law and are clearly erroneous in view of the reliable, probative, and substantial evidence of the whole record....

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