Carven v. State Ret. & Pension Sys. of Md.

• Court: Maryland Supreme Court
• Writing for the Court: BARBERA
• Citation: Carven v. State Ret. & Pension Sys. of Md., 7 A.3d 38, 416 Md. 389 (Md. 2010)
• Decision Date: 26 October 2010
• Docket Number: No. 58, Sept. Term, 2009.,58, Sept. Term, 2009.
• Parties: Elizabeth M. CARVEN v. STATE RETIREMENT & PENSION SYSTEM OF MARYLAND.

7 A.3d 38

416 Md. 389

Elizabeth M. CARVEN

v.STATE RETIREMENT & PENSION SYSTEM OF MARYLAND.

No. 58, Sept. Term, 2009.

Court of Appeals of Maryland.

Oct. 26, 2010.

Edward J. Lilly (Jennifer L. Lilly of The Law Offices of Peter G. Angelos, P.C., Baltimore, MD; Sean P. Carven, Bel Air, MD), on brief, for appellant/cross-appellee.

Rachel S. Cohen, Asst. Atty. Gen. (Douglas F. Gansler, Atty. Gen. of Maryland, Baltimore, MD), on brief, for appellee/cross-appellant.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS and BARBERA, JJ.

BARBERA, J.

In this case we are asked to consider whether an enrollee in the Maryland Employees' Pension System ("EPS") who is receiving benefits under that system is eligible for membership in Maryland's Judges' Retirement System ("JRS") if subsequently employed in a position that otherwise qualifies for JRS membership.

I.

The EPS and the JRS are separate benefit-providing systems within the State Retirement and Pension System of Maryland ("SRPS").¹ Both systems are administeredby theSRPS Board of Trustees ("the Board"). In addition to the Board, the General Assembly created the State Retirement Agency ("the Agency"), as an agency of the Board, "to carry out the administrative duties of the several systems" within the SRPS. Maryland Code (2004 Repl.Vol., 2007 Cum.Supp.), §§ 21-117, 21-119 of the State Personnel & Pensions Article ("SPP").² During the time period relevant to this case, membership in the EPS was available to, among others, "regular employee[s] whose compensation is provided by State appropriation or paid from State funds" and "appointed or elected official[s] of the State," and membership in the JRS was available to, among others, judges on the Maryland Court of Appeals, the Court of Special Appeals, the county circuit courts, and the district courts, as well as commissioners of the State Workers' Compensation Commission ("WCC"). See SPP §§ 23-201(a), 27-201. Appellant, Elizabeth Madeline Carven, instituted this case after the death of her husband, Arthur Frank Carven, III, to contest the denial of his application for JRS membership while he served as a WCC commissioner.³

From 1979 until 1987, Commissioner Carven served as an Assistant State's Attorney for Harford County. In 1987,Commissioner Carven was appointed to the Governor's office to serve as the Executive Assistant for Public Safety, and he later served as Assistant Attorney General for the Maryland Department of the Environment until his retirement on January 1, 1996. At that time, Commissioner Carven had accrued 16 years and 6 months of service credit, qualifying him to receive retirement benefits through the EPS. After retiring, Commissioner Carven practiced law in the private sector until he was appointed County Attorney for Harford County in 1998.

As County Attorney, Commissioner Carven's income exceeded the EPS earnings limitation, and, consequently, his retirement allowance ceased. The Agency notified Commissioner Carven that he was ineligible to earn additional service credit as County Attorney even though Harford County was a participating employer within the SRPS.⁴ Commissioner Carvenserved as County Attorney for five and a half years until he was appointed to the WCC in 2004. As indicated above, commissioners on the WCC are generally eligible for membership in the JRS. When Commissioner Carven notified the SRPS of his employment with the WCC, however, the Agency informed him that he remained subject to an earnings limitation that prevented him from collecting his retirement allowance. The Agency also notified him that he could not become a member of the JRS because he was an EPS retiree, and retirees of the EPS were ineligible to rejoin any State system.⁵

On May 6, 2004, Commissioner Carven wrote to the Board chairman requesting "assistance" in reference to his "new position as a Workers' Compensation Commissioner and entry into the [JRS]." Commissioner Carven argued that the Agency's position was "unfair, inequitable, and erroneous" because the prohibition on re-enrollment in a system was meant to prevent employees from earning service credit in the same system from which they were already receiving a retirement allowance, and EPS retirees participating in the JRS would earn service credit in a system entirely separate from the system from which they had been receiving their retirement allowance. In support of his position, Commissioner Carven cited various statutory provisions and an Attorney General's Opinion.

In a letter dated May 24, 2004, the executive director of the Agency responded to Commissioner Carven's letter, informing him that EPS retirees "are not permitted to rejoin any State system if they are reemployed by the State, including the [JRS]." After explaining the statutory and legal grounds for the Agency's decision, the executive director noted that Commissioner Carven could "request an administrative appeal of this action by submitting a Petition for Hearing to [him] in the format required under COMAR 22.03.04.07" and that Commissioner Carven "must submit a petition for hearing within 180 days of the date of [the] letter." The letter also stated that, if Commissioner Carven failed "to submit a petition for hearing within 180 days of [the] letter, [he would] not have any further right to appeal [the] matter."

Rather than request an administrative appeal, however, Commissioner Carven sought a legislative remedy. On July 7, 2005, Delegate Kevin Kelly, on Commissioner Carven's behalf, wrote to Robert A. Zarnoch, then Counsel to the General Assembly,⁶ requesting an opinion as to whether a " Commissioner[could] voluntarily forgo his service allowance during his term on the [WCC] and thereafter receive creditable service in the [JRS] during his term on the Commission." On September 14, 2005, Robert N. McDonald, Chief Counsel of Opinions and Advice in the Attorney General's Office, responded in a letter to Delegate Kelly that "the Commissioner may not voluntarily give up his service retirement allowance under EPS in order to earn creditable service inthe JRS during his term with the Commission." McDonald further advised Delegate Kelly that, "[t]o rectify the situation, it would be necessary to obtain corrective legislation."

Commissioner Carven attempted to secure the passage of such legislation in two legislative sessions, but was unsuccessful. On February 3, 2005, Senate President Thomas V. "Mike" Miller, Jr., introduced Senate Bill 419, which would allow EPS retirees "who are appointed as members of the [WCC] to receive service credit in the [JRS] while receiving a service retirement allowance from the [EPS]." S.B. 419, 420th Gen. Assem., Reg. Sess., (Md.2005). The bill did not pass. On March 19, 2006, Delegate Kelly introduced similar legislation, House Bill 1738, that would allow retirees of EPS to "repay certain benefits ... to the Board of Trustees" and require the Board "to suspend the retirement allowance" of retirees of the EPS while allowing those retirees to "receive a normal service retirement benefit from the [JRS]." H.B. 1738, 421st Gen. Assem., Reg. Sess., (Md.2006). That legislation also failed.

On June 17, 2006, Commissioner Carven completed a written application for JRS enrollment, and, on September 7, 2006, after Commissioner Carven's death, Mrs. Carven received a letter from the SRPS informing her that, under Maryland law, Commissioner Carven was ineligible for membership in the JRS.

The Litigation

On January 12, 2007, Mrs. Carven, as Commissioner Carven's sole heir and the beneficiary designated in his JRS membership application, filed a petition for an administrative hearing pursuant toCode of Maryland Regulations ("COMAR") 22.03.04.07.⁷ On February 12, 2007, theAgency's executive director notified Mrs. Carven that he was recommendingthat the Board issue a summary decision denying her request. The Agency based its decision, in part, on Commissioner Carven's failure to request a hearing within 180 days of the May 2004 letter notifying Commissioner Carven of his ineligibility for membership in the JRS and apprizing him of the time limit to submit a petition for a hearing. The letter further explained the Agency's position that the re-employment rules for retirees of the EPS prohibit retirees from earning further credits toward retirement while re-employed with any participating employer. In a letter dated April 23, 2007, the Board notified Mrs. Carven of its decision to adopt the Agency's recommendation and deny her request.

On May 7, 2007, Mrs. Carven filed a petition for judicial review in the Circuit Court for Harford County. On November 27, 2007, that court transferred the case to the CircuitCourt for Baltimore County because the judges of the Circuit Court for Harford County had recused themselves from the case. After a hearing on April 30, 2008, the Circuit Court for Baltimore County issued a memorandum opinion and order dated October 31, 2008, reversing the Board's determination that Carven's petition for a hearing was untimely but upholding the Board's decision to deny the membership application.

The court, relying on COMAR 22.03.04.06B, which provides that "[a] petition for a hearing shall be filed within 180 days of the date that a claimant is given notice of an Agency action," and COMAR 22.03.04.02B(2), which defines a claimant as "a participant or a participating employer that has filed a request for a hearing," found that Commissioner Carven was not subject to the time limitation at the time he received the May 2004 letter. The court reasoned that, because Commissioner Carven had not yet formally applied for membership in the JRS when he received the letter, he did not fall within the COMAR definition of "claimant" at that time. Additionally, citingCOMAR 22.03.04.02B(5), which defines a hearing as "a contested case hearing as defined by the Administrative Procedure Act [ ("APA") ]," and the APA, which defines, in relevant part, a contested case...