Marion County Jury Issues Unanimous Verdict in Kay Bell

The Marion County jury hearing the negligent misrepresentation case against PERS issued a unanimous verdict in favor of Ms. Bell on July 15. The amount awarded was over $200,000. A message from the attorneys has shed more light on why the jury decided as it did and what will now occur as the case heads toward appeal. Here’s part of that message:

“The jury unanimously found that the PERS member reasonably relied on the false information provided by PERS and that she suffered loss of salary and benefits of $200,707.04 as a result of giving up her job in reliance on the false information provided by PERS. The PERS Board has already notified the trial court of its intent to challenge the $200,707.04 jury verdict as exceeding the caps set by the Oregon Tort Claims Act. Once the tort claims caps issue is decided by the trial judge and a judgment is entered, the case will likely also be appealed by the PERS Board.

“The appeal will give the Oregon appellate courts not only the opportunity to set precedent on whether the PERS Board owes a special duty of care to PERS members to provide them accurate information but also whether the Tort Claims Act should limit damages between a fiduciary and beneficiary like the PERS Board and PERS members. The jury verdict can also be used to support legislative and administrative reform of the PERS retirement audit process, requiring PERS to perform such an audit before a member retires to allow both the member and PERS sufficient time to challenge the accuracy of the information before retirement...”

Possible reform proposals may be discussed at the next Coalition meeting. (Posted July 25, 2008)

Judge Kantor issues long-awaited decision

Arken/Robinson:  Judge Kantor finally issued the clarification to his initial ruling in these two cases. Here’s the message from the PERS Coalition attorney Greg Hartman about the clarification that came down May 24.

“As you will recall, in last year's decision, Judge Kantor found in favor of both Arken and Robinson petitioners on the grounds that Section 14b of the 2003 Legislation prevented PERS from recouping any alleged overpayments from PERS window retirees. On behalf of Arken petitioners, we asked Judge Kantor to clarify this decision because we did not raise Section 14b as a basis for summary judgment in the Arken case and because Judge Kantor failed to rule altogether on Arken petitioners' first claim for relief alleging breach of contract and promissory estoppel in light of the Oregon Supreme Court's COLA decision in Strunk.

“In today's decision, Judge Kantor has ruled against Arken petitioners on that breach of contract and promissory estoppel first claim for relief. However, his initial decision protecting all window retirees under the Section 14b reasoning still stands. We are still analyzing the opinion, but based on our initial review, it appears that Judge Kantor found that the Supreme Court's decision in Strunk did not rule that the 2003 Legislature created a contractual right to the 20 percent earnings. Therefore, the breach of contract claim will have to be decided by the appellate courts. While we are disappointed by the decision, we want to remind you all that we have always expected this case to be decided ultimately by the Oregon Supreme Court.

“We will update you once we have completed a more thorough review of Judge Kantor's decision.”

The PERS response to the Kantor opinion is posted on our Documents Page. Click here to read it. (Updated June 5, 2008)

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REFUND PROCESS ENDS . . . The opportunity to apply for a refund of contributions to OPRLF in the Sartain case has now ended. OPRLF had pledged in court when asking for attorney fees in that case that it would refund contributions to the extent possible to any contributor who requested one. That process began in January and ended June 15, 2008.

At its June 16 meeting, the board heard from Vern Fisher, chair of the OPRLF, that it had refunded more than $12,200 to 113 members who applied for a refund of contributions they made between July 1, 2003 and October 21, 2005 (when Sartain was decided). Although some of the unrefunded money will be placed in a trust fund with the attorneys who represent OPRI and the PERS Coalition in the pending lawsuits, much of it will be invested on behalf of OPRLF, after the state and federal taxes are paid.

OPRLF recovered $535,625 as the result of the Supreme Court decision from which it paid the attorneys who represented OPRLF in the attorney fee recovery process, leaving $243,704.95 for refunds to any contributor who requested one. Fewer contributors sought refunds than had been anticipated so the money remaining will be used to meet ongoing legal expenses in the cases still pending in the courts. A list of those cases also appears on this page. (Posted June 17, 2008)

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OPR-PAC NEWS – The OPR-PAC met briefly on June 16 and decided to consider endorsing legislative candidates this year. Our PAC last did that in the 2002 elections. The results were not encouraging – the 2003 PERS “reform” legislation that we are now fighting in the courts. That experience causes our PAC to sit out the 2004 and 2006 elections, although we continued to make our presence known to the Legislature through lobbying during the 2005 and 2007-2008 sessions.

Our PAC is rethinking its endorsement policy, knowing that any effort to get an ad hoc adjustment for retirees is going to require a concerted effort on our part with legislative support.

The PAC (Pat West, chair; Carol Fleming and Kathleen Beaufait) will be talking to and about legislative candidates and consulting with knowledgeable sources to find candidates worthy of our support. Members can help. Share with us what you know about legislative candidates. Help us find worthy candidates who will support our messages to the Legislature.

Contact OPR-PAC at pacounsel@pacounsel.org or at PO Box 12945, Salem, Or. 97309. PAC meeting dates will be posted on our web site. (Posted June 17, 2008)

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WHO PAYS THE ATTORNEY FEES? –

• Window retirees pay

• Tier I active members pay

Here’s why:

Window retirees --  The prevailing parties (the PERS Coalition and OPRI) in the Strunk/Sartain cases which restored window retiree COLAs were awarded their attorney fees in those cases by the Oregon Supreme Court. In determining where the money to pay those fees was to come from, the court relied on a long line of court decisions holding that those who benefit from decisions should pay the fees.

The Court found that window retirees were the beneficiaries because their COLAs were restored by the decisions in those cases. And the Court, holding to past decisions in such matters, thus ordered PERS to assess a one-time charge against each window retiree’s COLA. The attorney fees were large because the litigation was protracted. But it is a one-time charge against the restored COLAs.

Active Tier one members -- These still active PERS members also are paying, but in a different way. That’s because Tier One actives also are considered beneficiaries because the Supreme Court decision restored the 8 percent guarantee to Tier One regular accounts. So the PERS Board will credit 8 percent to Tier One regular accounts for 2007, but a portion of that 8 percent will be used to pay the attorney fees/costs as directed by the Oregon Supreme Court. At its February 15, 2008 meeting, the Board approved a preliminary 2007 earnings crediting rate of 7.97 percent after subtracting from Tier One regular account earnings for the plaintiff’s attorney fees/costs. Final earnings crediting occurred at the Board’s March 28, 2008 meeting.

Note: If the process whereby the wrongfully withheld COLAs or the 8 percent amount restored to Tier One accounts seems convoluted, it is. It may be difficult to do, but try to look at it this way: You are paying your share of attorney fees you would have incurred personally if you had sued to restore your COLA or the eight percent, except that your “share” is a lot less because ALL window and Tier One beneficiaries have to contribute, not just those who “volunteer.”(Updated June 29, 2008)

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LEGISLATIVE ADVISORY COMMITTEE UPDATE –  The Legislative Advisory Committee (LAC) for PERS met earlier this year to finalize issues on possible legislation for introduction in the 2009 Legislature. The committee has 14 members. Half represent employees and half employers.

Here are the issues that moved from the LAC to PERB:

1. Reemployment of retirees – PERS staff wants a more consistent policy to address exemptions to 1039-hour limitation on reemployment. The PERS staff is recommending that the PERB’s legislative concept impose only those restrictions and limitations needed for tax qualification purposes. That would effectively eliminate the 1039-hour rule for bona fide retirees
    
2. Employer’s choice or “Pick a Plan” – This concept would require all employers participating in PERS to offer all PERS plans to employees (Tier 1, Tier 2 or OPSRP) Current laws do not clearly require this. This issue becomes very important to employees who transfer to other agencies. The concept would ensure that Tier 1 or Tier II employees will be able to continue their retirement plan with any PERS employer.
    
3. Tier II disability discrepancy – When Tier II was created, the retirement age was set at 60 but the disability was left to be calculated at age 58. PERS is developing draft legislation on this issue. PERS would also like to increase from 10 to 15 business days the time for application of disability.
    
4. Service during arbitration – Currently, employees who are separated from employment but are reinstated due to resolution of an employee/employer dispute and who receive retroactive wage payment are not eligible for creditable service for the time of their separation. This concept would allow retirement credit to be awarded to a member who receives a retroactive wage payment once the dispute is resolved. PERS also is studying the possibility of a temporary rule that might solve the problem, but the legislative concept will stay on track in case it is needed. This issue arose out of a disability issue, but has now been broadened.
    
5. Tax Qualification Requirements – This is a placeholder bill and PERS has no paperwork as yet on it. It is to address any changes by the Federal government regarding qualification as a retirement plan. PERS at this point does not know if there will be any changes or what they might be, but the agency staff wants a bill to be ready if needed.
    

More research continues on several other possible 2009 PERS legislative issues:

1. De-Minimus payments – When an employee retires, the PERS account is closed. If there are later adjustment, PERS has to re-open the account. This is very costly given PERS’s current system even when the amount involved is as small as $1.19 per month. PERS staff is to provide additional information as to why it costs so much to make this adjustment, why some other payment method could not be used and, lastly, how small is “de-minimus.”
    
2. Tax adjustment for Fire and Police – As of January 1 of last year, Federal law provides that retired fire and police personnel can claim up to $3,000 reduction in gross income for health insurance premiums if they are paid in a specified manner. PERS staff will continue to research this and possibly consider extending it to all PERS retirees. One member of the PERS Coalition has requested a commitment from the PERB that PERS will incorporate the federal tax credit in to its news computer system and that it will be available by 2010.
    
3. More accurate PERS information – We have all noted complaints about the accuracy of data available from PERS relating to individual employees and retirees. More frequent updating is one suggestion. PERS is going to continue researching a “resolution panel” or an “ombudsman office.” More discussion is sure to follow on this one.
    
4. Rollover for purchase of service credits – Federal law allows such rollovers but PERS has to authorize them and it has not done so. PERS staff is looking at the 2011 session to address this issue because by that time the new computer system will be up and running. (Posted Jan. 30, 2008)