Wallace v. Board of Trustees

• Court: North Carolina Court of Appeals
• Writing for the Court: HUNTER.
• Citation: Wallace v. Board of Trustees, 145 N.C.App. 264, 550 S.E.2d 552 (N.C. App. 2001)
• Decision Date: 07 August 2001
• Docket Number: No. COA00-767.,COA00-767.
• Parties: Jane A. WALLACE, Petitioner, v. BOARD OF TRUSTEES, Local Government Employees' Retirement System, Respondent.

550 S.E.2d 552

145 NC App. 264

Jane A. WALLACE, Petitioner, v. BOARD OF TRUSTEES, Local Government Employees' Retirement System, Respondent.

No. COA00-767.

Court of Appeals of North Carolina.

August 7, 2001.

Lynn A. Andrews, Durham, for petitioner-appellee.

Attorney General Michael F. Easley, by Assistant Attorney General Robert M. Curran, for respondent-appellant. HUNTER, Judge.

Respondent-appellant Board of Trustees Local Governmental Employees Retirement System ("Board") appeals the trial court's reversal of its final agency decision in which the Board decided Jane A. Wallace ("petitioner") was not entitled to disability retirement benefits for the months of March 1997 and October 1997 through May 1999. Having reviewed the whole record before us, we reverse the trial court's ruling.

Facts pertinent to this appeal are as follows: Petitioner "suffers from a bipolar, or manic-depressive, mood disorder." In 1988, she gained full-time employment with Trend Mental Health, Developmental Disabilities, and Substance Abuse Authority Center ("Trend") and "became a contributing member of the Retirement system." During the first several years with Trend, petitioner was able to manage her illness with medication and received several promotions, moving into a management-level position in 1994. However, "[b]eginning in 1994, [petitioner]'s illness became increasingly resistant to medication. During 1996, [she] experienced considerable difficulties in performing her duties as Substance Abuse Program Coordinator. By January of 1997, [she] was unable to perform [her required] duties." Thus in February 1997, with the permission of her employer, petitioner left her full-time management position and began working as a part-time substance abuse counselor. This change was both a reduction in pay and a demotion in position for petitioner.

Also in February 1997, petitioner submitted to her employer an application for disability retirement. Under the section of the application entitled "Employer Certification" was noted that petitioner "[h]as not terminated" and that "[e]mployee is still employ[ed]." Additionally, in forwarding petitioner's disability application to the Retirement System, Trend's human resources director, Rick Wagner, attached a cover letter to the application in which he stated:

Jane Wallace was out of work for an extended period of time due to health reasons but she has returned to work on a reduced schedule. She requested reclassification from 100% FTE Substance Abuse Program Supervisor at $33,074 to 71% FTE Substance Abuse Counselor II position at $22,391. This change reduces her work time, salary, and supervisory responsibilities and she feels that this may qualify her for disability benefits. At this time she has not indicated if she plans to stop working due to her disability.

(Emphasis added.) In response, the Retirement System returned petitioner's application attaching an "Information Checklist" which stated that in order to "fully process [petitioner's] application for retirement," the application needed to be notarized and certain payroll information, which had been requested on the form but was missing, needed to be completed.

Petitioner sent a second disability retirement application to the Retirement System on 4 March 1997, which included the information requested by way of the "Information Checklist." Again, in the section entitled "Employer Certification," the words "full time" were inserted "[w]here the form asked for the [petitioner's] last day of employment." Additionally, in response to the request to "[i]ndicate last day [petitioner] worked (physically on job)," "2/8/97 [—] employee is still employed part time in reduced capacity" was clearly written in the space provided.

The Medical Board "approved [petitioner's] application for disability retirement pursuant to N.C. Gen.Stat. § 128-27(c) and informed the Petitioner of its approval by letter dated April 22, 1997." Petitioner was then notified of her approval, to be effective 1 April 1997. Thereafter, petitioner began receiving her retirement benefits. Subsequently, "[o]n October 27, 1997, the Retirement System notified Petitioner by letter that it was suspending payment of her retirement benefits, because as a contributing member of the system, she was not eligible under the applicable statutes to also receive retirement benefits." The Retirement System further advised petitioner that she was to repay the benefits she had already been paid between 1 April and 30 September 1997, which amounted to $7,236.48. In response, petitioner filed for a contested case hearing which was held before Administrative Law Judge ("ALJ") Brenda Becton. On behalf of the Board, Marshal Barnes, Deputy Director of the Retirement System, testified that it is possible for a member of the Local Government System to be approved for disability retirement benefits and still work part-time

[p]rovided that they work less than 1,000 hours per year[ and] depend[ing] on where they're working.... The statutes governing disability retirement under the Local System do provide a person to have a certain amount of earnings without affecting their benefit[ but] it does matter who they go back to work with. If they remain working in the Local Governmental System, they would have to be in a position in which it did not require participation [in the Retirement System].

Mr. Barnes continued:

[T]he definition of retirement under the statute requires a person to terminate covered employment to be entitled to a retirement allowance.

...

[Covered employment being defined a]s 1,000 hours or more per year in the Local System....

...

The current [benefit] booklet that I have is dated July 1996, and on page 3, it says, "When you join, you become a member of the Retirement System on your date of hire if you are a permanent employee of a participating unit and your duties require that you work at least 1,000 hours a year."

Then, in response to whether the benefit booklet is "distributed to all members of the Local Retirement System," Mr. Barnes answered:

[W]henever we reprint the benefit booklet, which is generally—sometimes we do it annually, but, generally, it's about every two years that we update that booklet. And whenever we update that, it is distributed to each employer that participates in the System, and we provide them more than enough copies to distribute to their employees.

However in her recommended decision, upon making appropriate findings Judge Becton concluded, among other things, that:

2. In the present case, it is clear that at the time [petitioner] was approved for disability, she was able to engage in gainful employment, albeit in a limited capacity and at reduced hours from her usual occupation. The [applicable] statute specifically provides that the ability to engage in gainful employment does not preclude the receipt of disability benefits....

Thus, Judge Becton recommended that the Final Decision of the Board:

(1) reinstate [petitioner]'s disability payments effective March 1, 1997, pursuant to N.C. Gen.Stat. § 128-27(c)[;] (2) schedule [petitioner]'s disability case for periodic medical review, pursuant to N.C. Gen.Stat. § 128-27(e); and (3) any adjustment of [petitioner]'s disability allowance which may be required be prospective only, pursuant to N.C. Gen.Stat. § 128-27(e)(1) and 20 NCAC 2C.0503.

Nevertheless, in its final agency decision, the Board rejected the majority of Judge Becton's findings and conclusions, and concluded, solely on the basis of N.C. Gen.Stat. § 128-21 and N.C. Admin. Code tit. 20, r. 2c.0802 (September 1977), that:

3. At no time relevant to her application for retirement has the Petitioner ever "retired" as that term is defined in the applicable statutes and rules. Therefore, at no time has the Petitioner been qualified to receive disability retirement benefits.

4. The Retirement System is authorized to seek reimbursement from any member or beneficiary respecting any overpayment of benefits, pursuant to G.S. § 128-27(I). Petitioner has erroneously been overpaid benefits in the amount of $7,236.48.

Petitioner petitioned the superior court for judicial review on the basis that: the Board had failed to review the entire record before it, as required by law; that the Board had unlawfully gone outside of the official record (evidenced by the fact that "some of [its] findings ... were not supported by any evidence contained in the official record"); that statutory law quoted by the Board in support of its final agency decision does not apply to the situation at hand and does not address the petitioner's claim to disability retirement benefits; that the Board's decision is "[u]nsupported by substantial evidence admissible," and; that the Board's decision is arbitrary and capricious.

After making many detailed findings, including that Judge Becton's findings of fact contained in her ALJ recommended decision were supported by substantial admissible evidence of record, and that the Board "did not consider the `official record' as defined by N.C.G.S. 150B-37 and 150B-42(b) ... despite statements to the contrary contained in the Final Agency Decision[,]" the trial court concluded:

3. That the [Board] unconstitutionally interfered with the Petitioner's vested rights in her pension plan....

4. That the [Board] exceeded its statutory authority or jurisdiction [in] den[ying] the Petitioner's request for disability benefits... [and in]

5 .... discontinu[ing] the Petitioner's disability benefits....

...

9. That the [Board] erred when it failed to interpret N.C.G.S. 128-27 consistent with the overall policies of the retirement, disability and death benefit schemes.

10. That the [Board]'s findings, inferences, conclusions and decisions are unsupported by substantial evidence admissible under N.C.G.S. 150B-29(a), 150B-30, or 150B-31 in view of the record as submitted....

Thus, the trial court reversed the Board's final agency decision and...