W. Va. Consol. Pub. Ret. Bd. v. Clark, No. 20-0350

CourtSupreme Court of West Virginia
Writing for the CourtWALKER, Justice
Citation859 S.E.2d 453
Parties WEST VIRGINIA CONSOLIDATED PUBLIC RETIREMENT BOARD, Respondent Below, Petitioner v. Robert CLARK, et al., Petitioners Below, Respondents
Decision Date14 June 2021
Docket NumberNo. 20-0350

859 S.E.2d 453

WEST VIRGINIA CONSOLIDATED PUBLIC RETIREMENT BOARD, Respondent Below, Petitioner
v.
Robert CLARK, et al., Petitioners Below, Respondents

No. 20-0350

Supreme Court of Appeals of West Virginia.

Submitted: April 13, 2021
Filed: June 14, 2021


Ronda L. Harvey, Esq., Bowles Rice LLP, Charleston, West Virginia, Counsel for Petitioner.

Lonnie C. Simmons, Esq., DiPiero Simmons McGinley & Bastress, PLLC, Charleston, West Virginia, Counsel for Respondents.

WALKER, Justice:

859 S.E.2d 457

Since 1996, the West Virginia Division of Natural Resources (DNR) has paid Natural Resources Police Officers a "subsistence allowance" to cover their phone service, dry cleaning, and meals. Beginning in 1997, DNR reported those payments to the Consolidated Public Retirement Board (the Board) as part of the officers’ "compensation," a key component in the calculation of their retirement annuities under the Public Employees Retirement System (PERS). In 2014, the Board determined that the subsistence allowance is not "compensation," for purposes of PERS, and that the error had impacted the calculation of officers’ and DNR's contributions to PERS as well as the amount of benefits paid to retired officers. The Board selected several means to correct the error, including recapturing benefit overpayments made to retired officers.

Respondents—current and retired officers and their widowers and widows—unsuccessfully challenged the benefit determination to the Board. But they prevailed before the circuit court, which reversed the Board's ruling. Now, we reverse in part and affirm in part the circuit court's order. We find, contrary to the circuit court, that the subsistence allowance is not "compensation," under PERS. But, like the circuit court, we find that the Board may not recover the excess retirement benefits already paid due to the erroneous treatment of the subsistence allowance as PERS compensation.

I. FACTUAL AND PROCEDURAL HISTORY

Respondents are active or retired law enforcement officers employed by DNR.1 West Virginia Code § 20-7-1c (2017) sets officers’ minimum annual salary (base pay), keyed to years of service and rank. Under § 20-7-1(i) (2015),2 officers receive a "subsistence allowance" of $130 each month, in addition to their base pay. The subsistence allowance is for officers’ "required telephone service, dry cleaning or required uniforms, and meal expenses while performing their regular duties in their area of primary assignment[.]"3 DNR also pays an officer's actual expenses incurred working outside that area.4 The amount of the subsistence allowance does not vary, and it is paid to an officer when he is working or on paid annual, military, or sick leave. Officers on unpaid leave do not receive the allowance.5

The Legislature enacted the subsistence allowance in its near-current form in 1996.6 Beginning in March 1997, DNR treated the subsistence allowance as part of officers’ "compensation" under PERS.7 Section 5-10-2(8) of PERS defines "compensation" as:

859 S.E.2d 458
the remuneration paid a member by a participating public employer for personal services rendered by the member to the participating public employer.... Any lump sum or other payments paid to members that do not constitute regular salary or wage payments are not considered compensation for the purpose of withholding contributions for the system or for the purpose of calculating a member's final average salary. These payments include, but are not limited to , attendance or performance bonuses, one-time flat fee or lump sum payments, payments paid as a result of excess budget, or employee recognition payments. The board shall have final power to decide whether the payments shall be considered compensation for purposes of this article[.][8 ]

For clarity, we refer to such remuneration as "pensionable compensation."

DNR reports employees’ gross salary to the Board, along with its own and its employees’ corresponding contributions to PERS. For officers, that gross salary amount included the subsistence allowance.9 By including the allowance as part of officers’ gross salary reported to the Board, DNR increased the officers’ pensionable compensation. Increased pensionable compensation means increased inputs to, and outputs from, PERS. As for inputs, the amount of an employee's total, annual pensionable compensation dictates the amount of money the officers and DNR must contribute to PERS.10 And as for outputs, PERS retirement annuities are calculated based on, in part, an employee's "final average salary," a figure derived from an employee's annual, pensionable compensation.11 The Board offers training to employers on what is and what is not pensionable compensation, and will advise an employer whether a particular payment is subject to PERS upon request.12 DNR did not ask the Board whether the allowance was pensionable compensation.

In 2014, officer Jon Cogar asked the Board to estimate his PERS retirement benefits. The Board audited Mr. Cogar's file and noticed "atypical" salary payments. The Board contacted DNR in March 2014 and asked for a report of any special payments made to Mr. Cogar since June 2006, from which retirement contributions had been withheld. DNR sent the requested report, in which it broke down those special payments by DNR payment code, including "135 Subsistence." The report showed that Mr. Cogar had received a $65.00 subsistence allowance, bimonthly, from June 2006 until March 2014. At the Board's request, DNR prepared a "PERS Inflated Salary Classification Form," to permit the Board to determine whether the allowance met the criteria for "compensation" under PERS.

On April 23, 2014, the Board notified DNR that because the subsistence allowance had not been paid for personal services rendered, it was not "compensation" under PERS. The Board directed DNR to stop withholding retirement contributions from the subsistence allowance. Then, on April 29, 2014, the Board notified Mr. Cogar of its determination. In July 2014, DNR advised the Board that it disagreed with that determination.13 Later, the Board informed DNR and Mr. Cogar that it was taking another look at whether the subsistence allowance was, in fact, pensionable. The Board also instructed DNR to

859 S.E.2d 459

"maintain the status quo – i.e. , continue treating subsistence payments received by [officers] as compensation and salary for purposes of PERS."

In October 2015, the Board informed all DNR law enforcement officers—active and retired—that it had finally determined that the subsistence allowance was not pensionable compensation. The Board advised retired officers, including Mr. Cogar, that they were entitled to be paid back the excess contributions they had made to PERS due to the erroneous treatment of the allowance as pensionable compensation. The Board also informed the retired officers that if further inquiry showed that the allowance had been included in their "final average salary,"14 then the Board had to (1) recover any benefits overpaid to the retired officers, either by lump sum, lifetime reduction of benefits, or reduction of benefits over a set period of time, offset by any excess contributions they may have made to PERS15 and (2) adjust their retirement annuities prospectively to the correct monthly annuity amount.16

Respondents filed a joint administrative appeal and request for declaratory relief17 with the Board, arguing, among other things, that the allowance is compensation for services rendered—meaning it is pensionable compensation—and that the Board's determination violated their vested pension rights. The hearing examiner issued a recommended decision finding that under the plain language of the pertinent statutes, the allowance was not pensionable compensation and that both the 2011 and 2015 versions of the PERS error "correction statute," West Virginia Code § 5-10-44,18 plus the Board's fiduciary duties, permitted it to recover benefit overpayments made to retired Respondents. The Board adopted the hearing examiner's recommended order in December 2017,19 and Respondents appealed to circuit court.20

By order entered March 19, 2020, the circuit court reversed the Board's final order. First, the court found that the allowance was compensation because Respondents received those payments so long as they were not on unpaid leave. From that, the circuit court inferred that the payments were, in fact, "for services rendered," and so were pensionable compensation. The court was also persuaded by Respondents’ argument that the list of exceptions in § 5-10-2(8) did not include the allowance, meaning that the Legislature hadn't expressed an intention to keep the allowance out of PERS compensation. The court rejected the Board's plain-language arguments

859 S.E.2d 460

and its position that its interpretation of "compensation" in this case should be afforded deference, as it is the agency charged with implementing PERS.

The court also found that DNR's inclusion of the allowance in compensation was not an "employer error," correctable under § 5-10-44 (2011) because (1) there was no error to begin with, and (2) DNR's treatment of the allowance as pensionable compensation was "deliberate," so it was...

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3 practice notes
  • Metro Tristate, Inc. v. Pub. Serv. Comm'n of W. Va., No. 20-0766
    • United States
    • Supreme Court of West Virginia
    • 14 Junio 2021
    ...regulated the VA by virtue of its police powers, so far as this court is aware. Instead, the VA has traditionally been exempted from 859 S.E.2d 453 state CON laws. When VA facilities expand services, a VA facility does not have to comply with the CON requirements. Id. at 90-91, 120 S.Ct. 11......
  • Milan Puskar Health Right v. Crouch, CIVIL ACTION NO. 3:21-0370
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • 15 Julio 2021
    ...not expressly seek retroactive enforcement. See West Virginia Consol. Pub. Ret. Board v. Robert Clark , No. 20-0350, 245 W.Va. 510, ––––, 859 S.E.2d 453 (W. Va. June 14, 2021) ("A statute that diminishes substantive rights or augments substantive liabilities should not be applied retroactiv......
  • Milan Puskar Health Right v. Crouch, Civil Action 3:21-0370
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • 31 Marzo 2022
    ...the language cannot require compliance before its own effective date. ECF No. 31, at 8; see W.Va. Consol. Pub. Ret. Bd. v. Clark, 859 S.E.2d 453, 466 ( W.Va. 2021) (“A statute that diminishes substantive rights or augments substantive liabilities should not be applied retroactively to event......
3 cases
  • Metro Tristate, Inc. v. Pub. Serv. Comm'n of W. Va., No. 20-0766
    • United States
    • Supreme Court of West Virginia
    • 14 Junio 2021
    ...regulated the VA by virtue of its police powers, so far as this court is aware. Instead, the VA has traditionally been exempted from 859 S.E.2d 453 state CON laws. When VA facilities expand services, a VA facility does not have to comply with the CON requirements. Id. at 90-91, 120 S.Ct. 11......
  • Milan Puskar Health Right v. Crouch, CIVIL ACTION NO. 3:21-0370
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • 15 Julio 2021
    ...not expressly seek retroactive enforcement. See West Virginia Consol. Pub. Ret. Board v. Robert Clark , No. 20-0350, 245 W.Va. 510, ––––, 859 S.E.2d 453 (W. Va. June 14, 2021) ("A statute that diminishes substantive rights or augments substantive liabilities should not be applied retroactiv......
  • Milan Puskar Health Right v. Crouch, Civil Action 3:21-0370
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • 31 Marzo 2022
    ...the language cannot require compliance before its own effective date. ECF No. 31, at 8; see W.Va. Consol. Pub. Ret. Bd. v. Clark, 859 S.E.2d 453, 466 ( W.Va. 2021) (“A statute that diminishes substantive rights or augments substantive liabilities should not be applied retroactively to event......

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