Czarnecki v. State Employees' Ret. Bd.
| Decision Date | 06 July 2016 |
| Docket Number | No. 1225 C.D. 2015,1225 C.D. 2015 |
| Citation | 143 A.3d 460 |
| Parties | Thomas R. CZARNECKI, Petitioner v. STATE EMPLOYEES' RETIREMENT BOARD, Respondent. |
| Court | Pennsylvania Commonwealth Court |
Samuel L. Spear, Philadelphia, for petitioner.
Paul M. Stahlnecker, Harrisburg, for respondent.
BEFORE: MARY HANNAH LEAVITT, President Judge, and RENÉE COHN JUBELIRER, Judge, and ROBERT SIMPSON, Judge, and P. KEVIN BROBSON, Judge, and PATRICIA A. McCULLOUGH, Judge, and ANNE E. COVEY, Judge, and MICHAEL H. WOJCIK, Judge.
OPINION BY Judge SIMPSON.
Thomas R. Czarnecki (Petitioner) petitions for review from a decision and order of the State Employees' Retirement Board (Board) that excluded pay for on-call service from the amount of compensation in calculating his retirement benefit under the State Employees' Retirement Code, 71 Pa.C.S. §§ 5101 –5957 (Retirement Code). Petitioner challenges the denial of his request for recalculation of his final average salary to include compensation he earned as an “on call” staff physician of the Department of Public Welfare1 (Department) at the Harrisburg State Hospital, an inpatient mental health facility. He argues the Board's exclusion of on-call services from his benefits calculation violated his due process rights. Concluding the Board erred as a matter of law, we reverse and remand for a recalculation of benefits.
Petitioner was a staff physician for the Department at the hospital from 1981 until his retirement in June 2005. During that time, he volunteered to provide on-call service to ensure 24–hour patient care. In that capacity, Petitioner answered patient-care questions on the telephone, and he was required to be within 20 minutes of the hospital at all times to provide in-person treatment as needed.
A collective bargaining agreement (CBA) governed Petitioner's compensation throughout his employment. The CBA required that each “on call” physician provide a telephone number where he could be reached and be available for service within 20 minutes of a call. The CBA provided that physicians who serve in an on-call status “shall, at the employee's discretion, either be paid 25% of their base hourly rate for such ‘on-call’ time or receive compensatory time equivalent to 25% of such ‘on-call’ time ...” Bd. Op., 6/22/15, at 3 (quoting Article 12, Section 14 of the CBA). When called in to the hospital, a physician received “emergency duty” compensation at 100% of his base rate for a minimum of three hours.
From 1981 until the early 1990s, the Department reported Petitioner's on-call service to SERS. The Department reported on-call time and pay separately from his regularly-scheduled service. Petitioner received retirement credit for the on-call services reported. For unknown reasons, the Department stopped reporting Petitioner's on-call hours to SERS as of January 1, 1993. Nevertheless, SERS continued to receive reports of on-call pay, and accepted pickup contributions and employer contributions from the Department for Petitioner through 1999.
In 2000, SERS discovered that since 1993, the Department did not provide SERS with Petitioner's on-call hours or information necessary for crediting that service. Accordingly, SERS contacted the Office of Administration (OA) advising that without the requisite information (hours, employer and employee contributions and compensation) the member could not receive retirement credit.
Also in 2000, SERS advised OA that it would no longer accept “on-call” service information based on a new interpretation of the Retirement Code. As a result, the Department stopped reporting Petitioner's on-call service to SERS and stopped making employer contributions for his service. Therefore, from 2000 until Petitioner's retirement in 2005, Petitioner did not earn retirement credit for his on-call service.
Petitioner obtained a retirement benefit estimate from SERS around this time, and he learned the on-call service was not included. He retired in 2005. In 2007, Petitioner asked SERS to “correct the improper calculation” of his retirement benefits in order to include his on-call service. Reproduced Record (R.R.) at 152a. SERS denied the request, explaining: “Employees on standby overtime are not actually working for the Commonwealth and do not receive regular remuneration for the time spent waiting to be called to work.” R.R. at 154a, SERS Ex. 4 (emphasis in original). SERS determined an on-call physician who is not at the hospital is not “actually engaged in work” for the Commonwealth. Id. ).
Petitioner appealed SERS' decision, arguing SERS' interpretation of the Retirement Code added the requirement to be “actually engaged in work.” Id. The SERS' Appeals Committee reviewed and denied his claim. Petitioner appealed that denial, thereby initiating the formal appeal process before a hearing officer.
After holding a hearing in July 2010, a hearing officer issued a proposed adjudication (Adjudication) recommending denial of Petitioner's claim. Specifically, she found that 10% of the time he was on call, Petitioner did not need to report to the hospital. Hr'g Officer Adj., 2/1/11, Finding of Fact (F.F.) No. 20.
Petitioner filed exceptions to the Adjudication, to which SERS filed a brief in opposition. SERS did not file exceptions.
Four years later, in a split decision, the Board adopted the Adjudication, denying Petitioner's appeal. The Board determined on-call service, which was compensated at 25% of the base rate, did not qualify for compensation. Accordingly, the Board did not include Petitioner's pay for on-call service in the calculation of his final average salary. It explained service, salary and contributions were “inseparable components” of retirement benefits. Bd. Op., 6/22/15, at 9. Based on Hoerner, the Board reasoned Petitioner's on-call service did not qualify as “creditable” because he was not “actually engaged in work” when not at the hospital. Id. at 13. Thus, it equated on-call service to standby overtime.
Petitioner filed a petition for review of the Board's decision. After briefing and oral argument, the matter is ready for disposition.
On appeal,2 Petitioner argues SERS erred in construing the definition of compensation under the Retirement Code to exclude the on-call pay he earned as a state employee from the calculation of his retirement-covered compensation. He asserts the compensation he received for on-call services should be credited toward his final average salary used for determining his pension benefit. He also contends SERS' exclusion of on-call service from the benefit calculation after decades of including it, without notice, amounts to an unconstitutional deprivation of his pension rights without due process.
The question before us is limited to whether the on-call service Petitioner provided to the Department, which was compensated at 25% of his base rate throughout his employment, should have been included in the final average salary component of SERS' calculation to determine his retirement benefit.
At the outset, we recognize the Board is entitled to considerable deference in its construction of the statute and its attendant regulations. Weaver v. State Emps. Ret. Bd., 129 A.3d 585, 587 n. 2 (Pa.Cmwlth.2015), app. den., ––– Pa. ––––, 138 A.3d 7 (2016). Consequently, the Board's interpretation of the Retirement Code may not be overturned unless it is clearly erroneous. Id.
Moreover, the Board has the obligation to “liberally administer the retirement system in favor of the members of the system.” Palyok v. Borough of W. Mifflin, 526 Pa. 324, 586 A.2d 366, 368 (1991). However, “a liberal administration of the retirement system does not permit the [B]oard to circumvent the express language of the [Retirement] Code....” Weaver, 129 A.3d at 588 .
In construing terms in the Retirement Code, we follow the principles of statutory construction. Burris v. State Emps. Ret. Bd., 745 A.2d 704 (Pa.Cmwlth.2000). The object of statutory interpretation is to ascertain and effectuate legislative intent. 1 Pa.C.S. § 1921(a). “Words and phrases in a statute must be construed according to their common usage and plain meaning.” Burris, 745 A.2d at 707 (citing 1 Pa.C.S. § 1903(a) ; Com. v. Stanley, 498 Pa. 326, 446 A.2d 583 (1982) ).
The Retirement Code defines “compensation” in pertinent part as: “Pickup contributions plus remuneration actually received as a State employee excluding refunds for expenses, contingency and accountable expense allowances; excluding any severance payments or payments for unused vacation or sick leave; and excluding payments for military leave....” 71 Pa.C.S. § 5102 (emphasis added). The regulation defines compensation as: “Limited to salary or wages received for services performed as an employee, but excluding monies received for bonuses, cash awards or similar emoluments.”3 4 Pa.Code § 241.1 (emphasis added).
A member's pension benefit is calculated as provided for in 71 Pa.C.S. § 5702. Final average salary is defined in pertinent part as: “[t]he highest average compensation received as a member during any three nonoverlapping periods of four consecutive calendar quarters during which the member was a State employee ...” 71 Pa.C.S. § 5102. Notably, final average salary is dependent on the amount of compensation. Unlike credited service, it is not a function of time or hours worked for full-time state employees.
Both the Retirement Code and its corresponding regulations restrict the types of compensation that may be used in calculating an employee's final average salary. Beardsley v. State Emps. Ret. Bd., 691 A.2d 1016 (Pa.Cmwlth.1997) (en banc). “These restrictions serve to ensure the actuarial soundness of the retirement fund by preventing employees from artificially inflating compensation as a...
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