Sheldon v. Kansas Pers

• Decision Date: 01 August 2008
• Docket Number: No. 99,012.,99,012.
• Citation: 189 P.3d 554
• Parties: William A. SHELDON, Appellant, v. KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Appellee.
• Court: Kansas Court of Appeals

189 P.3d 554

William A. SHELDON, Appellant, v. KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Appellee.

No. 99,012.

Court of Appeals of Kansas.

August 1, 2008.

James S. Oswalt, of Hutchinson, for appellant.

J. Phillip Gragson, of Henson, Clark, Hutton, Mudrick & Gragson, LLP, of Topeka, for appellee.

Before McANANY, P.J., GREEN and CAPLINGER, JJ.

McANANY, P.J.

This appeal involves the decision of the Kansas Public Employees Retirement System (KPERS) to deny disability benefits to William A. Sheldon. The appeal is complicated by two factors. First, the case was resolved before the agency by summary judgment rather than the typical weighing of conflicting evidence, making factual findings, and arriving at legal conclusions that arise from the facts as established. Second, the agency never determined whether Sheldon was totally disabled as defined by the policy. Summary judgment was entered because Sheldon's claim was too late.

In order to provide a complete factual overview, we will summarize the facts from the record. As will be seen, we will constrain our factual consideration considerably once we undertake the analysis needed to evaluate the court's ruling on the summary judgment motion that led to this appeal.

KPERS was created by the Kansas Legislature to be "a body corporate and an instrumentality of the state of Kansas." K.S.A. 74-4903. It provides retirement and other benefits, including disability benefits, to participating members. Sheldon was a member of KPERS. He was a school teacher who taught and coached athletics in schools in Langdon and Sharon Springs before coming to the Lewis Unified School District No. 502 (U.S.D. 502) in August 1988, where he taught and coached in the elementary school, junior high, and high school.

While at U.S.D. 502, Sheldon developed back problems and underwent surgeries in 1999 and 2000. The surgeries did not resolve his back pain, so he stopped coaching though he continued to teach. Virgil Ritchie, the school principal who later became school superintendent, encouraged Sheldon to apply for disability benefits on one or two occasions, but Sheldon thought his back would improve.

Before beginning the 2001-2002 school year, U.S.D. 502 notified Sheldon and others that their teaching contracts would not be renewed at the end of the school year due to a decline in student enrollment and resulting budget constraints. Sheldon's back condition was not a factor in the decision to terminate his employment. Sheldon taught throughout the school year. His last day of teaching for the school district was May 24, 2002.

Over that summer and during the summer of 2003, Sheldon taught drivers' education courses in Larned. He also applied for various teaching positions in Kansas, Texas, New Mexico, Nebraska, Montana, and Colorado. Sheldon was unable to obtain another teaching position.

In November 2003, Sheldon called KPERS to inquire about disability benefits. Melva Janke, an administrative assistant handling disability claims, spoke with Sheldon and followed up with a letter in which she stated:

"To be eligible to receive a monthly disability benefit under the terms of the KPERS disability income benefit policy, a member must be totally disabled for over 180 continuous days. The 180 day waiting period commences the day after the member's last day physically on the job in a KPERS covered position. A Disability Income Benefit Certification is enclosed for further description of total disability.

"Your employer states you left work due to reduction of force, therefore, it appears you would not meet the definition of total disability at the time you left."

Janke called U.S.D. 502 to inquire why no disability claim had been filed on Sheldon's behalf. She was advised that no claim was filed because the school district understood that Sheldon intended to continue working after he lost his position with U.S.D. 502.

Almost a year later, on October 6, 2004, Dr. Pedro A. Murati examined Sheldon and opined that Sheldon suffered a 20% whole person impairment based on his low back injury. On October 11, 2004, Sheldon made his first request to KPERS for disability benefits. On December 29, 2004, Security Benefit Life Insurance Company (Security Benefit), the KPERS plan administrator, denied Sheldon's claim because he was not totally disabled within the meaning of the disability policy and because he failed to provide timely written notice of the claim.

On January 1, 2005, DCG Resource Options, LLC, (DCG) replaced Security Benefit as the plan administrator. Sheldon's request for reconsideration was referred to DCG. DCG reconsidered the claim and, on March 30, 2005, again denied it based upon Sheldon not meeting the definition of total disability as of May 24, 2002, when he left the school district.

Sheldon sought an administrative appeal with KPERS. He supported his claim with medical opinions from Dr. Murati and from Dr. Kris Lewonowski, the surgeon who operated on Sheldon's back. Dr. Lewonowski opined that Sheldon was disabled on and before May 24, 2002. To explain his late filing, Sheldon claimed he had been dissuaded from pursuing his claim by KPERS employees.

After the completion of discovery, KPERS moved for summary judgment, arguing that Sheldon's claim was untimely. KPERS did not argue that Sheldon was not totally disabled on May 24, 2002. In his response Sheldon claimed that KPERS should be estopped from raising the lateness of his claim and, in any event, KPERS had not been prejudiced by the late assertion of his claim. The hearing officer sustained KPERS' motion, finding that Sheldon's claim was not timely. The hearing officer made no finding as to whether Sheldon was disabled as of May 24, 2002. After exhausting his administrative remedies, Sheldon filed an action for judicial review in the district court. The district court affirmed the denial of disability benefits, and this appeal followed.

Standards of Review

The district court's review of actions of an administrative agency is governed by the Kansas Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq. Miller v. Board of Trustees of KPERS, 21 Kan.App.2d 315, 317, 898 P.2d 1188 (1995). When we review the district court's decision upholding KPERS' decision to deny benefits to Sheldon, we must first determine whether the district court followed the requirements and restrictions placed on it and then conduct the same review of the agency's action as required of the district court. See Jones v. Kansas State University, 279 Kan. 128, 139, 106 P.3d 10 (2005).

K.S.A. 77-621(c) lists the bases for granting Sheldon relief upon judicial review. These are the standards that apply in both the district court and in this court on appeal. They are:

"(1) The agency action, or the statute or rule and regulation on which the agency action is based, is unconstitutional on its face or as applied;

"(2) the agency has acted beyond the jurisdiction conferred by any provision of law;

"(3) the agency has not decided an issue requiring resolution;

"(4) the agency has erroneously interpreted or applied the law;

"(5) the agency has engaged in an unlawful procedure or has failed to follow prescribed procedure;

"(6) the persons taking the agency action were improperly constituted as a decision-making body or subject to disqualification;

"(7) the agency action is based on a determination of fact, made or implied by the agency, that is not supported by evidence that is substantial when viewed in light of the record as a whole, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this act; or

"(8) the agency action is otherwise unreasonable, arbitrary, or capricious." K.S.A. 77-621(c).

Here, the administrative proceeding did not involve presenting evidence before the hearing officer and the hearing officer weighing the conflicting evidence in order to arrive at a decision. Rather, the hearing officer ruled on KPERS' motion for summary judgment, a procedure specifically authorized by K.S.A. 77-519(a) of the Kansas Administrative Procedure Act. The KPERS Board of Trustees then reviewed the hearing officer's order and voted to adopt it in full.

This raises the question: By what standard do the district court and this court evaluate the hearing officer's order sustaining KPERS' summary judgment motion and the KPERS Board of Trustees' decision to adopt it in full? We do not find the parties' appellate briefs to be helpful in this regard. Further, prior Kansas cases do not provide us with any guidance. The only case we find which deals with the review of an agency's grant of summary judgment, Abbott v. Kansas Board of Examiners in Optometry, 268 Kan. 739, 1 P.3d 318 (2000), does not address the standard of review. However, the standards for summary judgment are well known and can be found in Korytkowski v. City of Ottawa, 283 Kan. 122, 128, 152 P.3d 53 (2007).

In his appellate brief, Sheldon states that we are bound on appeal by the substantial competent evidence standard found in K.S.A. 77-621(c)(7) and that we must view the evidence in the light most favoring the prevailing party. K.S.A. 77-621(c)(7) certainly cannot apply on judicial review of a summary judgment order, since the standard for summary judgment is not whether there is substantial evidence on the record as a whole to support the judgment, but rather whether there is no genuine issue of material fact and whether the movant is entitled to judgment as a matter of law. Further, it seems contradictory to suggest that we must view the evidence in the light most favoring the prevailing party when, in summary judgment proceedings, the court must resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the nonmoving party. See State ex rel. Stovall v. Reliance Ins. Co., 278 Kan. 777, 788, 107 P.3d 1219 (2005).

In its appellate brief, KPERS...