McIntyre v. Bd. of Retirement of Santa Barbara County Employees

• Decision Date: 25 July 2001
• Docket Number: No. B144038,B144038
• Citation: 110 Cal.Rptr.2d 565
• Court: California Court of Appeals Court of Appeals
• Parties: (Cal.App. 2 Dist. 2001) LARRY McINTYRE, Petitioner and Appellant, v. BOARD OF RETIREMENT OF SANTA BARBARA COUNTY EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent. 2d Civil SECOND APPELLATE DISTRICT, DIVISION SIX Filed

110 Cal.Rptr.2d 565 (Cal.App. 2 Dist. 2001)

LARRY McINTYRE, Petitioner and Appellant, v. BOARD OF RETIREMENT OF SANTA BARBARA COUNTY EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent.

2d Civil No. B144038

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT, DIVISION SIX

Filed 7/25/01 Modified and Certified for Pub.

8/14/01 (order attached)

(Super. Ct. No. 1002752) (Santa Barbara County)

James W. Brown, Judge Superior Court County of Santa Barbara

James R. Christiansen. Edward L. Faunce; Lemaire, Faunce, Pingel & Singer, for Appellant.

Reicker, Pfau, Pyle, McRoy & Herman; James E. Herman and Alan A. Blakeboro, for Respondent.

ORDER MODIFYING OPINION DENYING REHEARING AND CERTIFYING OPINION

FOR PUBLICATION

[No Change in Judgment]

THE COURT:

It is ordered the opinion filed herein on July 25, 2001, be modified as follows:

On page 4, the first sentence of the first full paragraph beginning with the words "For the same reasons," is deleted and the following sentence is inserted in its place.

For the same reasons, we reject appellant's contention that to fulfill its fiduciary duty to remain neutral at the hearing, the Board must rely only upon the employer to oppose applications that lack merit.

There is no change in the judgment.

Appellant's petition for rehearing is denied.

The opinion in the above entitled, matter filed on July 25, 2001, was not certified for publication in the Official Reports. For good cause it now appears that the opinion should be published in the Official Reports and it is so ordered.

YEGAN, J.

Larry McIntyre appeals from the judgment denying his petition for a writ of mandate (Code Civ. Proc. 1085) compelling respondent Santa Barbara County Employees' Retirement System, Board of Retirement (Board) to follow certain procedures in deciding his application for a service connected disability retirement. He contends the Board's procedures result in a breach of its fiduciary duties, violate due process, and violate the 1937 Public Employees' Retirement Act (CERA). (Gov. Code, 31450, et seq.)¹ The trial court found each claim to be without merit as a matter of law. We affirm.

Facts

Appellant developed mycoplasmic pneumonia in 1989. The disease left him susceptible to blood clots and, as a result, he is required to take a blood-thinning medication called Coumadin. Appellant's employer, the Summerland-Carpinteria Fire District, determined that he could no longer perform his job duties as a fire fighter because the medication increases the risk he will suffer a serious injury. Appellant last worked for the fire district in September 1997.

In May 1998, he applied to the Board for a service connected disability retirement. The Board obtained copies of appellant's medical records and referred him to a doctor for examination. After reviewing a staff report, the Board appointed referee Catherine Harris to conduct a hearing on the application. The hearing never occurred because appellant filed this petition.

Appellant's petition alleges that the procedures adopted by the Board are biased against applicants and that the Board owes a fiduciary duty of loyalty to applicants which it breaches whenever it takes a position adverse to an applicant. Appellant does not claim that anyone involved in his application is actually biased against him. Rather, he alleges the bias is inherent in the Board's bylaws and procedures because the doctors, lawyers and staff it retains are all biased against applicants. Appellant further contends the Board violates due process by unilaterally selecting hearing officers, and by participating as an adverse party in the hearings.² Finally, appellant alleges that the Board violates CERA by participating as an adverse party in hearings, determining whether a disability is service connected, and requiring the applicant both to provide medical records and submit to an examination by a Board-appointed doctor.

The trial court rejected each of these claims as a matter of law, concluding the Board had not breached its fiduciary duties or violated appellant's due process rights. Appellant raises the same arguments here. We reject them for many of the reasons advanced by the trial court.

Standard of Review

Mandamus is available to correct an abuse of discretion by an administrative official. (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 442; California Teachers Assn. v. Ingwerson (1996) 46 Cal.App.4th 860, 865.) "When a court reviews an administrative decision pursuant to Code of Civil Procedure section 1085, it merely asks whether the agency's action was arbitrary, capricious, or entirely lacking in evidentiary support, or whether the agency failed to follow the procedure and give the notices the law requires." (Kreeft v. City of Oakland (1998) 68 Cal.App.4th 46, 52.) We review the trial court's factual findings for substantial evidence and exercise our independent judgment on the legal issues presented. (Id.; Scott v. Common Council (1996) 44 Cal.App.4th 684, 689.)

Fiduciary Duty

Appellant correctly notes that the Board owes fiduciary duties of good faith and loyalty to the county employees who are members of the retirement system. (Hittle v. Santa Barbara County Employees Retirement Assn. (1985) 39 Cal.3d 374, 392-393.) He contends this duty of loyalty requires the Board to avoid taking a position adverse to any employee. Thus, appellant contends, the Board breaches its duty of loyalty whenever it "actively" opposes an application by retaining counsel, hiring a doctor who opines that an employee is not eligible for benefits, or permits staff members to testify against an applicant at a hearing. Appellant appears to contend that the Board's fiduciary duties require it uncritically to approve every application for benefits, or at the very least to remain neutral on the question of whether a particular applicant is entitled to benefits. We are not persuaded.

Board members "are entrusted by statute with the exclusive authority to determine the factual issues whether a member is permanently incapacitated for duty (Gov. Code, 31725) and whether the disability is service connected (cf. Gov. Code, 31725.7, 31725.8)." (Masters v. San Bernardino County Employees Retirement Assn. (1995) 32 Cal.App.4th 30, 45.) The Board is therefore required to administer the retirement system "in a manner to best provide benefits to the participants of the plan." (City of Sacramento v. Public Employees Retirement System (1991) 229 Cal.App.3d 1470, 1493; see also Cal. Const., art. XVI, 17.) It cannot fulfill this mandate unless it investigates applications and pays benefits only to those members who are eligible for them. (City of Sacramento v. Public Employees Retirement System, supra, 229 Cal.App.3d at p. 1494. See also Gov. Code, 31723 [board may require such proof as it deems necessary to determine the existence of a disability]; Masters v. San Bernardino County Employees Retirement Assn., supra, 32 Cal.App.4th at p. 46.) Thus, the Board fulfills, rather than breaches its fiduciary duties when it retains staff, lawyers and doctors to represent it at benefit hearings.

For the same reasons, we reject appellant's contention that the Board has a fiduciary duty to remain neutral at the hearing and to rely instead upon the employer to oppose applications that lack merit. The Board, not the employer, has the constitutional and statutory duty to manage the retirement fund and to determine whether the fund is obligated to pay benefits to any particular applicant. It is not required to rely upon third parties, even interested third parties, to make those determinations on its behalf.

Due Process

Appellant contends the Board violates his due process rights by unilaterally selecting a hearing officer to decide his application and by actively opposing the application. Appellant presents no evidence that any person involved with his application is actually biased against him. Instead, his argument assumes that that all hearing officers and staff members are biased against all applicants because they are paid by the Board, which is itself biased against all applicants. The claims are without merit.

First, the claims fail because they are unsupported by any evidence of actual bias and bias may not be presumed. "[D]ue process demands impartiality on the part of those who function in judicial or quasi-judicial capacities. [Citation.] We must start, however, from the presumption that the hearing officers . . . are unbiased. [Citations.] This presumption can be rebutted by a showing of conflict of interest or some other specific reason for disqualification. [Citations.] But...