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Harrison v. Arkansas Public Employees' Retirement System

Court of Appeals of Arkansas, Division I

March 27, 2019



          Frances Morris Finley, for appellant.

          Jessica Middleton, for appellee.

          BART F. VIRDEN, JUDGE.

         Darann Diane Harrison appeals the Pulaski County Circuit Court's dismissal of her petition for review of the Arkansas Public Employees' Retirement System (APERS) decision denying her request for payment of survivor benefits and the agency's conclusion that there were no accumulated contributions held by APERS. We affirm.

         I. Relevant Facts

         Gladis Bright was an employee of the Marianna Public School System from January 1978 until June 1990.[1] Bright filed her application for retirement on November 4, 2015, and unfortunately, she passed away only four days later. On November 17, 2015, APERS, unaware of Bright's death, sent her a letter informing her that she was a noncontributory member with twelve years and six months of service as of June 1990. The letter stated that Bright had selected annuity Option A120 and had designated Harrison, her daughter, as her beneficiary. The letter explained that if Bright died before she received all 120 payments, her designated beneficiary would receive the same benefit amount that she had been receiving. The section entitled "Survivor Benefit" set forth that

[b]ecause you are vested for benefits, your eligible survivors may qualify for payments should you decease prior to retirement. Please advise your family to contact this office for information in the event of your death. A spouse, to whom you've been married at least one year, will be eligible for a benefit figured as if you retired on the day prior to your death and elected Option B75. Dependent children are also eligible for survivor benefits. There is no redactor for age applied to these benefits.

         On April 23, 2016, Harrison's attorney received an email from Jay Wills[2] who informed him that because Bright passed away two months before her retirement was effective and before the A120 annuity payments had begun, and because Harrison was not a surviving spouse or a dependent minor child, no benefits were available to her. Wills explained that if Bright had passed away after the annuity payments had commenced, Harrison would have been eligible to collect the remainder of the payments. Wills also explained that Bright was not a contributory member; thus, there were no accumulated retirement contributions to pass to the estate.

         Harrison appealed the decision to the APERS Board of Trustees ("Board"). The parties stipulated that Bright was a noncontributory member of APERS for twelve years and six months, that she filed her application for retirement on November 4, 2015, that Bright selected the annuity Option A120, that she designated her daughter as the beneficiary, and that Bright died on November 8, 2015, about two months before her retirement date of January 1, 2016.

         APERS provided the Board with a written determination in which it concluded the following: Arkansas Code Annotated section 24-4-608(a) (Repl. 2014) requires that an employee file a retirement application no less than thirty days before the first of the month in which he or she desires to retire, and Bright requested that her retirement begin January 1, 2016. Bright selected A120 retirement benefits under Arkansas Code Annotated section 24-4-606(a)(2) (Repl. 2014). Bright died before her retirement began, and because her retirement was not effective when she died, Arkansas Code Annotated 24-4-608 governed any survivor benefits. Under Arkansas Code Annotated section 24-4-608, only the surviving spouse, dependent parents, or dependent children are entitled to survivor's benefits. Bright was not a contributory member, and Arkansas Code Annotated section 24-4-101(12) (Supp. 2017) defines contributory member as one who contributes 5 percent or 6 percent of compensation to APERS. Subsection (26) defines "noncontributory member" as "one who does not contribute a portion of compensation." Arkansas Code Annotated section 24-4-602 (Repl. 2014) allows a refund of a deceased contributory member's own contributions, and employer contributions are not refunded.

         At the hearing, Harrison contended that because Bright chose annuity Option A120, and not Option B75, APERS erroneously based its decision on section 24-4-608. Harrison also asserted that pursuant to section 24-4-608(g) and section 24-4-1102 (Repl. 2014) she is entitled to receive all employer contributions that accumulated during Bright's employment.

         Wills refuted Harrison's claim that she is entitled to collect Bright's annuity payments because, Wills explained, Bright passed away before she reached retirement, and the balance of an annuity is paid to a beneficiary only when the employee's retirement has begun. Wills testified at the hearing that because Bright passed away before her retirement began on January 1, she was not a retirant and section 24-4-608, known as the "death in service" statute, applies here. Wills explained that the death-in-service statute provides that only dependent children, a spouse, and dependent parents are eligible for survivor benefits.

         Wills also testified that pursuant to Arkansas Code Annotated section 24-4-602, if an employee dies before all the annuity payments are made to the retirant, those contributions must either be refunded to the estate or paid to the designated beneficiary. Wills explained that as a noncontributory member, Bright had no contributions to refund. Wills responded to Harrison's assertion that section 24-4-1102 allows her to inherit any accumulated employer contributions. Wills testified that, in fact, the purpose of section 24-

          4-1102 is to allow the employer to "pick up" for the employee what would have been the tax liability for retirement contributions. On November 9, 2017, Harrison filed a petition for judicial review of the Board's decision, and ultimately, the circuit court affirmed the agency decision and denied her ...

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