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Vaughn v. Public Emples. Ret. Sys. of Miss.

Court of Appeals of Mississippi

February 10, 2015

KAYLA VAUGHN, APPELLANT
v.
PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF MISSISSIPPI, APPELLEE

          DATE OF JUDGMENT: 06/21/2013

          COURT FROM WHICH APPEALED: HINDS COUNTY CIRCUIT COURT. TRIAL JUDGE: HON. WINSTON L. KIDD. TRIAL COURT DISPOSITION: AFFIRMED THE DECISION OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM TO PAY THE ACTUARIAL EQUIVALENT OF GUARANTEED PAYMENTS TO THE RETIREE'S STATUTORY SUCCESSORS.

         FOR APPELLANT: JIM WARREN III, JACOB THOMAS EVANS STUTZMAN, JOSHUA REID DANIEL.

         FOR APPELLEE: JANE L. MAPP.

         LEE, C.J., BARNES, ROBERTS, CARLTON, FAIR AND JAMES, JJ., CONCUR. IRVING, P.J., CONCURS IN PART AND IN THE RESULT WITHOUT SEPARATE WRITTEN OPINION. GRIFFIS, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION, JOINED BY ISHEE, J.

          OPINION

Page 447

         EN BANC

         MAXWELL, J.

         [¶1] When a member of Mississippi's Public Employees' Retirement System (PERS) chooses to receive reduced monthly retirement payments throughout her life in exchange for guaranteed payments to her beneficiary for twenty years, who gets the remaining guaranteed payments if both the retiree and the beneficiary die before the twenty-year period runs out? According to PERS, the retiree 's surviving family members do. But appellant Kayla Vaughn says PERS is wrong. Instead, Kayla argues PERS is directed by statute to pay her, the beneficiary 's surviving family member, even though she is not related to the retiree.

         [¶2] PERS's payment to the retiree's surviving family members complied with both the language of the relevant statute and the retiree's chosen payment option before the statute existed. Yet Kayla asks us to invert the statute and instead declare that an exception to the statute is really the rule. But the clear rule is that, when both the retiree and her designated beneficiary die, the actuarial equivalent of any future guaranteed payments goes to the retiree's surviving family members. And the limited exception is that any uncashed checks PERS had issued to the beneficiary and any cost-of-living adjustment based on past payments to the beneficiary go to the beneficiary's surviving family members.

Page 448

          [¶3] After review, we find PERS followed this rule and its limited exception and, in doing so, gave effect to the retiree's intent when selecting her payment option.

         [¶4] We therefore affirm.

         Background Facts and Procedural History

         [¶5] Marjorie Kahn was a state employee and consequent member of PERS. In October 1999, she applied for disability retirement. Like other applicants, she was given a choice of payment options. She chose " Option 4-B." See Miss. Code Ann. § 25-11-115(1) (Rev. 1999). Under this option, Marjorie would receive " [a] reduced retirement allowance" throughout her life in exchange for " the further guarantee of payment to the named beneficiary, beneficiaries, or to the estate, for a specified number of years certain." Id. And if she or her last designated beneficiary died " prior to receiving all guaranteed payments due," then " the actuarial equivalent of the remaining payments would be paid to the estate of the retired as intestate property." Id.

         [¶6] Majorie named her daughter, Heather Vaughn, as her beneficiary. Marjorie named no other contingent beneficiary. Soon after making these elections, Marjorie died. So under Option 4-B, PERS began making monthly payments to Heather in the amount of $922.63, guaranteeing these monthly payments for twenty years, through October 2019.

         [¶7] Six months after Marjorie's death, the Legislature amended section 25-11-115(1). The revised Option 4-B directed PERS, in the event " the retired member or the last designated beneficiary both die before receiving all guaranteed payments due," to pay " the actuarial equivalent of the remaining payments . . . under [the newly created] Section 25-11-117.1(1)[.]" Miss. Code Ann. § 25-11-115(1) (Rev. 2010) (citing Miss. Code Ann. § 25-11-117.1(1) (Rev. 2010), enacted by 2000 Miss. Laws, Ch. 628, § 2 (H.B. 1281)).

         [¶8] In August 2011, Heather also died. Traveling under revised Option 4-B, PERS calculated the actuarial equivalent of the more than eight years of remaining guaranteed payments to be $110,163. PERS then looked to section 25-11-117.1(1), which, according to PERS, directed it to pay the remaining money to Marjorie's statutory successors.[1] So PERS contacted Marjorie's family to determine which of Marjorie's surviving family members were entitled to this payment.

         [¶9] PERS also contacted Heather's family, informing them that, based on subsection (2) of section 25-11-117.1, they were entitled to a prorated cost-of-living adjustment for the portion of the 2011-2012 fiscal year when Heather was still alive and received monthly payments. See Miss. Code Ann. § 25-11-117.1(2).[2]

Page 449

          [¶10] At this point, Heather's half-sister, Kayla Vaughn, objected to PERS distributing the actuarial equivalent of the remaining payments to Marjorie's statutory successors. Instead, Kayla insisted that even though she is not related to Marjorie,[3] PERS should give her the remainder of Marjorie's retirement benefits.

         [¶11] As Kayla saw it, the $110,163 should have been paid to Heather's statutory successors under section 25-11-117.1(2), not retiree Marjorie's statutory successors under section 25-11-117.1(1). When PERS rejected her position, Kayla asked for and was granted an administrative hearing before the Claims Committee for the PERS Board of Trustees. See Miss. Code Ann. § 25-11-120(1) (Rev. 2010). The Committee confirmed the $110,163 was to be paid to Marjorie 's successors under subsection (1), not Heather's successors under subsection (2). And the Board of Trustees adopted the Committee's recommendation.

         [¶12] Kayla then appealed to the Hinds County Circuit Court. See Miss. Code Ann. § 25-11-120(2). The circuit court affirmed PERS's decision. But the court did grant Kayla's request to enjoin PERS from disbursing the $110,163 to Marjorie's successors until Kayla's appeal before this court is finally resolved.

         Discussion

         I. Marjorie's Intent

         [¶13] While PERS and Kayla hotly dispute the significance of the language in both revised Option 4-B and section 25-11-117.1, neither has disputed that this language controls, despite the fact that section 25-11-117.1 was not even part of the PERS retirement statutes when Marjorie selected Option 4-B. Still, our law is clear that these statutes cannot be applied in a way that defeats the clear intention of the deceased retired member. In re Estate of Dillon, 632 So.2d 1298, 1303-04 (Miss. 1994); see also Pub. Emps' Ret. Sys. v. Porter, 763 So.2d 845, 849-50 (¶ ¶ 14-16) (Miss. 2000).

         [¶14] By selecting Option 4-B--as that option existed in 1999--Marjorie's intent was obvious. She chose the particular option that ensured her that if she and Heather both die before all guaranteed payments were made, Majorie's intestate estate--i.e., Marjorie's statutory heirs--would receive the actuarial equivalent of the remaining payments. This much is crystal clear. And it is inconceivable from the PERS statutes in effect at the time of Majorie's retirement application and soon-after death that Marjorie intended any remaining retirement benefits would go to Heather's heirs, should Heather die before all payments were made.

         [¶15] So even if we were to agree with the dissent that Kayla's interpretation of sections 25-11-115(1) and 25-11-117.1 was correct--which we do not--we would still have to reject this interpretation as applied to Marjorie's retirement benefits. See Porter, 763 So.2d at 849-50 (¶ ¶ 14-16). Had PERS done what Kayla and the dissent suggest and paid Heather's heirs, instead of Marjorie's, it would have unconstitutionally

Page 450

impaired Marjorie's contractual right to have her heirs receive the remainder of her retirement if both she and Heather died before all guaranteed payments were made. Id. (citing U.S. Const. art. I, § 10; Miss. Const. art. 3, § 16).

         [¶16] Unlike Kayla's and the dissent's personal interpretations, PERS's interpretation of section 25-11-117.1 has the advantage of actually effecting Majorie's intent. And because Kayla's interpretation directly conflicts with Majorie's clear intent--that her next of kin, not Heather's, would receive any remaining guaranteed payments if both she and Heather died before 2019--we must reject it.

         II. PERS's Interpretation

         [¶17] Furthermore, PERS's interpretation has the additional advantage of being supported by the statute's language.

         A. Standard of Review

         [¶18] Because this appeal raises a question of statutory interpretation, Kayla asserts we must review PERS's decision de novo. While it is true that " [a]n agency's interpretation of its governing statutes is reviewed de novo," our supreme court has said we must conduct this review " with deference to the agency's interpretation." Miss. State & Sch. Emps' Life & Health Plan v. KCC, Inc., 108 So.3d 932, 939 (¶ 20) (Miss. 2013). " [W]hen determining the most reasonable and appropriate interpretation of a statute, the agency's interpretation is an important factor that usually warrants strong consideration." Diamond Grove Ctr., LLC v. Miss. State Dep't of Health, 98 So.3d 1068, 1071 (¶ 9) (Miss. 2012). So " unless an agency's interpretation of a governing statute is repugnant to the plain meaning thereof, the courts are to defer to the agency's interpretation." Id.

         [¶19] Stated differently, we only " give no weight to an agency interpretation" when it " is so plainly erroneous or so inconsistent with either the underlying regulation or statute as to be arbitrary, capricious, or contrary to the unambiguous language or best reading of a statute." KCC, 108 So.3d at 939 (¶ 20). This means we cannot take the dissent's approach and substitute PERS's interpretation of section 25-11-117.1 with our personal preference of how to read the statute. We must instead uphold PERS's decision to pay Majorie's heirs, not Heather's, so long as its statutory interpretation was not so inconsistent with the relevant statutes as to be arbitrary and capricious. Because we find PERS's decision was based on a reasonable interpretation of sections 25-11-115(1) and 25-11-117.1(1), consistent with the " best reading" of these statutes, and certainly not arbitrary and capricious, we must affirm.

         B. " Monthly Benefits Payable"

         [¶20] Revised Option 4-B directs that, when both the retiree and her named beneficiary have died, " the actuarial equivalent of the remaining payments shall be paid under Section 25-11-117.1(1)." Miss. Code Ann. § 25-11-115(1) (Rev. 2010). Section 25-11-117.1(1) begins by noting there is an exception--" Except as otherwise provided in subsection (2) . . . ." Kayla argues this " prefatory phrase" is there to steer PERS immediately to subsection (2) and first determine if its provisions apply. If they do, then according to Kayla the rest of subsection (1) " is negated" and has no application whatsoever.

         [¶21] As one would imagine, Kayla argues subsection (2) applies here. Under this subsection, " Any monthly benefits payable to a beneficiary who dies prior to cashing his or her final check(s) and/or any additional benefits payable pursuant to

Page 451

Section 25-11-112 still payable at the death of a beneficiary receiving monthly benefits shall be paid . . . [to] brothers and sisters of the beneficiary" when the beneficiary has no surviving spouse or descendants. Miss. Code Ann. § 25-11-117.1(2). Kayla claims, since Option 4-B guaranteed Heather monthly payments for twenty years, the remaining eight years of payments were " monthly benefits payable to a beneficiary who dies prior to cashing his or her final check(s)[.]" Miss. Code Ann. § 25-11-117.1(2).

         [¶22] In other words, Kayla is arguing that all twenty years worth of checks were " monthly benefits payable" to Heather the moment Marjorie died. She claims they belonged to the beneficiary, Heather, not the retiree, Marjorie. Thus, they should have passed to Heather's statutory successors. Kayla suggests that, if Marjorie had wanted one of her ...


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