McCormack v. STATE RETIREMENT BD.
Decision Date | 10 March 2004 |
Citation | 844 A.2d 619 |
Parties | Robert E. McCORMACK, Petitioner, v. STATE EMPLOYEES' RETIREMENT BOARD, Respondent. |
Court | Pennsylvania Commonwealth Court |
Elliot A. Strokoff, Harrisburg, for petitioner.
Paul M. Stahlnecker, Harrisburg, for respondent.
BEFORE: FRIEDMAN, J., COHN, J., and MIRARCHI, JR., Senior Judge.
OPINION BY Senior Judge MIRARCHI.
Robert E. McCormack (McCormack) appeals from an order of the State Employees' Retirement Board (Retirement Board) that denied his request for additional retirement service credit. The issue on appeal is whether McCormack is entitled to additional service credit under Section 5302(a) of the State Employees' Retirement Code (Retirement Code), as amended, 71 Pa.C.S. § 5302(a), based on the lump sum payment made by his former employer to settle his wrongful termination action. We affirm.
The following relevant facts found by the hearing examiner and the Retirement Board are undisputed. On September 24, 1979, McCormack became an active member of the State Employees' Retirement System (SERS) as an employee of the Office of Attorney General (OAG). From August 1990 until the OAG terminated his employment on December 7, 1992, McCormack was a special agent assigned to the OAG's office in Meadville, Pennsylvania to investigate environmental crimes. After the termination, McCormack decided to retire effective December 8, 1992 and receive retirement benefits under options he elected. At the time of the termination, McCormack had 16.1354 years of credited state service.
McCormack thereafter filed an action under 42 U.S.C. § 1983 against the then Attorney General, Ernest D. Preate, individually and in his official capacity, and the OAG's officials (collectively, OAG) in the United States District Court for the Middle District of Pennsylvania. In the second amended complaint, McCormack alleged that the OAG terminated his employment in retaliation for his criticism of the Attorney General's misuse and abuse of the office and in an effort to prevent him from investigating individuals and businesses that had made monetary contributions to the Attorney General's campaign fund. McCormack sought reinstatement of his employment, backpay, compensatory and punitive damages, and attorney's fees.
Following discovery, McCormack and the OAG began settlement negotiations in January 1998 through their attorneys. On April 21, 1998, McCormack and the OAG entered into a "Settlement Agreement and General Release" (Settlement Agreement), which provided in relevant part:
The Commonwealth of Pennsylvania, on behalf of the defendant ..., agrees to pay the plaintiff the total aggregate sum of $150,000 as full and complete settlement of all of plaintiff's claims in the lawsuits, including those for damages, declaratory and injunctive relief, attorney's fees, costs, and any other relief whether monetary or equitable to which the plaintiff may have been entitled or which he could have pursued in those cases. No further payments beyond that specified in this paragraph are to be made to plaintiff or his attorney.
Paragraph 4 of the Settlement Agreement (emphasis added).
On April 21, 1998, McCormack and the OAG also executed a Memorandum of Understanding, which stated that McCormack desired to be credited with payment for his annual leave as of December 31, 1992; he desired to allocate the $150,000 lump sum settlement payment as his salary and benefits, as if earned from January 1, 1993 to May 25, 1996, pursuant to the attached schedule prepared by his attorney; he intended to apply for retirement benefits with an effective retirement date of May 25, 1996; and, the OAG neither supported nor opposed McCormack's desire to receive service credit in accordance with applicable law. The total amount allocated in the attached schedule was $156,026.66, exceeding the settlement amount of $150,000. As agreed in the Settlement Agreement, the OAG paid $150,000 by a check payable to McCormack and his attorney.
During the settlement negotiations, the SERS' director of membership service division, Louise Bell, reviewed several drafts of the Memorandum of Understanding prepared by the parties and had numerous conversations with the OAG. After receiving copies of the Settlement Agreement and the Memorandum of Understanding executed by the parties, Bell checked McCormack's personnel record which still showed December 7, 1992 as the date of the termination of his employment and no additional employer and employee contributions made to his retirement account since the termination. The SERS then contacted the OAG and inquired about McCormack's status. In June 1998, McCormack met with the SERS staff to discuss his retirement and medical benefits. McCormack thereafter received medical benefits for two years, but the OAG refused to pay employer contributions despite the SERS' demands. It was Bell's understanding that McCormack was willing to make employee contributions on the settlement amount.
In a letter dated March 13, 2001, McCormack's current attorney requested that the SERS recalculate McCormack's retirement benefits to reflect service credit from January 1, 1993 to May 25, 1996. The SERS denied the request, stating that additional service credit could not be granted without the OAG's (1) change of the termination date in McCormack's personnel record from December 7, 1992 to May 25, 1996; (2) payment of full backpay and benefits through May 25, 1996; and (3) promise to pay the SERS employer contributions. The SERS' Appeals Committee later denied McCormack's appeal, and McCormack appealed to the Retirement Board.1 The OAG notified the Retirement Board that it would not intervene in McCormack's appeal.
In his opinion issued after a hearing, the hearing examiner recommended that McCormack's appeal be denied, concluding that he was not entitled to additional service credit from January 1, 1993 to May 25, 1996 because he was not a state employee during that period under the terms of the Settlement Agreement, and that the SERS lacked authority to unilaterally modify the terms of the Settlement Agreement or alter his personnel record. The Retirement Board subsequently denied McCormack's exceptions to the hearing examiner's recommendation and denied his appeal. McCormack's appeal to this Court followed.
McCormack contends that he is entitled to additional service credit from January 1, 1993 to May 25, 1996 because the lump sum settlement payment represents salaries that he would have earned during that period had he not been discharged, and that the OAG's refusal to pay employer contributions is not determinative of his entitlement to the requested additional service credit.2
The SERS is a creation of the legislature and, as such, its members have only those rights granted by the retirement benefit statute. Section 5955 of the Retirement Code, as amended, 71 Pa.C.S. § 5955; Cosgrove v. State Employes' Retirement Board, 665 A.2d 870 (Pa.Cmwlth.1995). Section 5302(a) of the Retirement Code provides that "[i]n computing credited State service of a member for the determination of benefits, a full-time salaried State employee ... shall receive credit for service in each period for which contributions as required are made...." (Emphasis added.)
The Retirement Code defines the term "State employee" as "[a]ny person holding a State office or position under the Commonwealth, employed by the State Government of the Commonwealth, in any capacity whatsoever...." Section 5102, as amended, 71 Pa.C.S. § 5102 (emphasis added). Under Sections 5507(a) and 5906(c) of the Retirement Code, as amended, 71 Pa.C.S. §§ 5507(a) and 5906(c), the Commonwealth employers are required to make contributions to the retirement fund for their employees who are active members of the SERS and deduct employee contributions from each payroll. As the party seeking additional service credit from January 1, 1993 to...
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