Court of Appeals of Arkansas, Divisions III and IV
BOARD OF TRUSTEES OF the ARKANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Craighead Nursing Center, Hudson Memorial Nursing Home, and Lawrence Hall Nursing Home, Appellants
v.
Martha Ella GARRISON, Shawn Marie Hall, Michelle Dawson, Willie Mae Dawson, and Nichelle Underwood, Appellees
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[Copyrighted Material Omitted]
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APPEAL
FROM THE PULASKI COUNTY CIRCUIT COURT, TWELFTH DIVISION [NO.
60CV-14-3075], HONORABLE ALICE S. GRAY, JUDGE
Frank
J. Wills III, for appellant Board of Trustees of the Arkansas
Public Employees Retirement System.
Waddell,
Cole & Jones, PLLC, by: Paul D. Waddell and Justin Parkey,
Jonesboro, for appellants Craighead Nursing Center and
Lawrence Hall Nursing Home.
Quattlebaum,
Grooms & Tull, PLLC, Little Rock, by: Michael Heister, for
appellant Hudson Memorial Nursing Home.
Hall &
Taylor Law Partners, by: Randy Hall, Little Rock and Mattie
Taylor; and Law Offices of Gary Green, Little Rock, by: Gary
Green, for appellees.
McMillan,
McCorkle & Curry, LLP, Arkadelphia, by: F. Thomas Curry, for
amici curiae Woodruff Nursing Home Board and Woodruff County
Health Center.
OPINION
RAYMOND
R. ABRAMSON, Judge
On
July 28, 2014, the Board of Trustees (Board of Trustees) of
the Arkansas Public Employees Retirement System (APERS)
issued findings of fact and conclusions of law finding that
the appellees, all former employees of county-owned nursing
homes, were not eligible for membership in APERS. The Board
of Trustees determined that the appellees were not
"county employees" eligible for APERS benefits
because they were paid from revenues generated by the
patients of the nursing homes, rather than from
appropriations made by the quorum courts of each county. The
appellees successfully appealed the Board of Trustees
decision to the Pulaski County Circuit Court, which entered
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an order and judgment reversing the administrative decision
on June 27, 2017. The Board of Trustees now appeals the
circuit courts decision. Because we hold that substantial
evidence supports the Board of Trustees finding that the
appellees were not "county employees" as the
General Assembly has defined that term in the APERS code, we
reverse the circuit courts judgment and dismiss the case.
I.
Background
The
appellees are former employees of nursing homes located in
Craighead, Lawrence, and Union Counties. Appellee Martha Ella
Garrison was employed by Craighead County Nursing Center from
1981 until 2003. Appellee Shawn Marie Hall was an employee at
Lawrence Hall Nursing Center from 1992 until 2007. Appellees
Michelle Dawson, Willie Mae Dawson, and Nichelle Underwood
were formerly employed by Hudson Memorial Nursing Home in
Union County. The nursing-home facilities are owned by their
respective counties and operated by administrative boards
appointed by the quorum courts. According to the Board of
Trustees, the nursing homes operating expenses, including
their employees compensation, are paid from patient
revenues.
In
2013, the appellees asked APERS to determine whether they
were entitled to retirement benefits, arguing that they were
eligible "county employees" as set forth in Ark.
Code Ann. § 24-4-302 (Repl. 2014) and § 24-4-101 (Supp.
2017).[1] Section 24-4-302 provides, in
pertinent part, that "all counties shall ... include
their employees, as defined in § 24-4-101(14), (17), and
(27), in the membership of the Arkansas Public Employees
Retirement System[.]"[2] Arkansas Code Annotated § 24-4-101,
moreover, provides the following relevant definitions:
(14)(A) "County employees" means all employees
whose compensations are payable, either directly or
indirectly, by county participating public employers[.]
....
(17)(A)(i)(a) "Employees" means all
officers and employees of any office, agency, board,
commission, including the Department of Higher Education, or
department of a public employer whose compensations were or
are payable from funds appropriated by the public employer
and all otherwise eligible employees whose compensations were
or are payable in whole or part from federal funds[.]
....
(27) "Nonstate employees" means county employees,
municipal employees, rural waterworks facilities board
employees, regional airport authority employees, public
facilities board employees, joint county and municipal
sanitation authority employees, regional water distribution
board employees, the employees of economic development
districts recognized as planning and development districts
under § 14-166-202, school employees, and the employees of
the Intergovernmental Juvenile Detention Council[.]
The
executive director of APERS rejected the appellees claims
for membership. According to the director, the appellees were
not eligible "county employees" because
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their compensation was payable from the patient revenues of
the nursing homes, rather than funds appropriated by the
quorum courts of their respective counties as required by
Ark. Code Ann. § 24-4-101(17)(A)(i)(a) .
The
appellees appealed the executive directors decision, and,
after an administrative hearing on April 30, 2014, the APERS
Board of Trustees made the following relevant factual
findings:
4. Each of the three nursing homes is operated by its
governing board, not by their respective counties quorum
courts. Each of the three nursing homes generates its own
operating funds from patient revenues. None of the three
nursing homes receives its operating funds from county
appropriations.
5. None of the Applicants compensations came from
appropriated county funds, i.e., from county quorum
court appropriations, either directly or indirectly. The
Applicants compensations were paid out of the revenues
received from the nursing homes patient revenues. No
ordinances that appropriated county funds for the nursing
homes employee salaries have been found by any party.
Based
on these findings, the Board of Trustees concluded that the
appellees were not "county employees."
According
to the Board of Trustees, § 24-4-302 required the appellees
to meet a combination of the definitions appearing in §
24-4-101(14), (17), and (27), in order to be eligible for
membership in APERS, and the appellees fell short because
there was no evidence that any of the county quorum courts
appropriated funds for their compensation as required by
§ 24-4-101(17)(A)(i)(a) . The Board of Trustees
unanimously determined, therefore, that the appellees
"were not eligible for membership in APERS because of
their employment at their respective nursing homes," and
affirmed the executive directors decision.
The
appellees sought judicial review in the Pulaski County
Circuit Court pursuant to Ark. Code Ann. § 25-15-212(a)-(b)
(Repl. 2014). The circuit court reversed the Board of
Trustees decision, finding, inter alia, that APERS
was "clearly wrong" when it "combined the
definitions in Ark. Code Ann. § 24-4-101(14), (17), and (27),
and required [the appellees] to meet all three definitions,
rather than treat each definition as separate and
distinct."
Nevertheless, the circuit court found that the appellees met
both the definition of "county employee" in §
24-4-101(14)(A) and the definition of "employee" in
§ 24-4-101(17). The nursing-home administrative boards, which
the circuit court found fell within the definition of
"county" in the APERS Code, were
"participating public employers," for purposes of
paying "county employee[s]" under Ark. Code Ann. §
24-4-101(14)(A). The court found, moreover, that the
appellees were "paid from revenues generated by the
respective facilities at which they worked, thus making
Petitioners compensations payable, either directly or
indirectly, by a county participating public employer"
under Ark. Code Ann. § 24-4-101(14)(A). The circuit court
also found that the appellees met the definition of
"employee" in § 24-4-101(17), concluding that the
nursing-home administrative boards, as public employers,
"appropriated" county funds to pay the appellees.
The
Board of Trustees and the nursing homes now appeal from the
circuit courts order. We reverse the circuit court and
affirm the Board of Trustees decision denying the appellees
membership in APERS.
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II.
Standards of Review
"Review of administrative agency decisions by both the
circuit court and the appellate court is limited in
scope." Shaw v. Ark. Dept of Human Servs.,
2018 Ark.App. 322, at 5, 550 S.W.3d 925, 928. The standard of
review is "whether there is substantial evidence to
support the agencys findings." Id. at 5, 550
S.W.3d at 928-29. The appellate courts review, moreover, is
directed toward the agency, rather than the circuit court,
"because administrative agencies are better equipped by
specialization, insight through experience, and more flexible
procedures than courts, to determine and analyze legal issues
affecting their agencies." Seiz Co. v. Ark. State
Highway & Transp. Dept, 2009 Ark. 361, at 2, 324 S.W.3d
336, 338. This court also
may reverse or modify an agency decision if the substantial
rights of [the appellees] have been prejudiced because the
administrative findings, inferences, conclusions, or
decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the agencys statutory authority;
(3) Made upon unlawful procedure;
(4) Affected by other error or law;
(5) Not supported by substantial evidence of record; or
(6) Arbitrary, capricious, or characterized by abuse of
discretion.
Ark. Code Ann. § 25-15-212(h) (Repl. 2014).
"Substantial evidence is valid, legal, and persuasive
evidence that a reasonable mind might accept as adequate to
support the agency decision." Shaw, 2018
Ark.App. 322, at 5, 550 S.W.3d at 929. The party challenging
the agency decision "must prove an absence of
substantial evidence and must demonstrate that the proof
before the administrative agency was so nearly undisputed
that fair-minded persons could not reach [the administrative
agencys] conclusion." Id., 550 S.W.3d at 929.
"The question is not whether the evidence would have
supported a contrary finding, but whether it supports the
finding that was made." Id., at 5-6, 550 S.W.3d
at 929. This court, in other words, "may not simply
substitute its judgment and discretion for that of the
administrative agency." Id. at 5, 550 S.W.3d at
929.
In
addition, "[a]dministrative action may be regarded as
arbitrary and capricious where it is not supportable on any
rational basis." Ark. State Police Commn v.
Smith, 338 Ark. 354, 363, 994 S.W.2d 456, 462 (1999).
"To have administrative action set aside as arbitrary
and capricious, the party challenging the action must prove
that it was willful and unreasoning action, without
consideration and with a disregard of the facts or
circumstances of the case." Id. at 363, 994
S.W.2d at 462. Indeed, "[a]n action is not arbitrary
simply because the reviewing court would act
differently[,]" and "once substantial evidence is
found, it automatically follows that a decision cannot be
classified as unreasonable or arbitrary." Id.
Finally, we must review the Board of Trustees interpretation
of the statutes governing the appellees eligibility for
membership in APERS. "The first rule of statutory
construction is to construe the statute just as it reads,
giving the words their ordinary and usually accepted meaning
in common language." Moore v. Ark. Alcoholic
Beverage Control Bd., 2016 Ark. 422, at 5, 503 S.W.3d
796, 800. Additionally, this court "construe[s] statutes
so that, if possible, every word is given meaning and
effect." Id. In other words, a statute is
construed "so that no word is left void, superfluous, or
insignificant, and meaning and effect are given to every word
in the
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statute if possible." Id. "When a statute
is clear," moreover, "it is given its plain
meaning, and this court will not search for legislative
intent; rather, that intent must be gathered from the plain
meaning of the language used." Id. Finally,
this court will review any issue of statutory interpretation
de novo, but "the interpretation placed on a statute or
regulation by an agency or department charged with its
administration is entitled to great deference and should not
be overturned unless clearly wrong." Seiz, 2009
Ark. 361, at 3, 324 S.W.3d at 338.
III.
Discussion
A.
Statutory Construction
The
Board of Trustees first argues that its decision to deny
membership to the appellees should be upheld because it
correctly construed Ark. Code Ann. § 24-4-302 to require the
appellees to meet all of the definitions in Ark. Code Ann. §
24-4-101(14), (17), and (27). We agree that all three
definitions must be applied to determine the appellees
eligibility for membership in APERS.
The
appellees argue, however, that "despite the use of the
word, and in Section 24-4-302, the three subsections [in §
24-4-101] are irreconcilable as conjunctive requirements for
eligibility," and they suggest that the court should
exchange "or" for "and" to effectuate the
legislatures intent. According to the appellees, §
24-4-101(14) and § 24-4-101(17) set forth two distinct
definitions that are specific to county employees and all
other eligible employees, respectively. They argue the two
definitions cannot be reconciled, moreover, because §
24-4-101(14)(A) allows for "indirect compensation"
while § 24-4-101(17)(A)(i)(a) speaks only in terms
of direct compensation through an appropriation. They assert,
therefore, that only the specific definition for county
employees in § 24-4-101(14)(A) should have been applied to
determine their eligibility.
The
appellees further assert that their disjunctive reading is
supported by Act 737 of 2011, now codified at Ark. Code Ann.
§ 24-4-302(5), which provides nursing homes "[o]wned but
not operated by a county" the option to "elect by a
vote of at least two-thirds (2/3) of its governing body to
exclude employees of the facility from membership in the
system[.]" According to the appellees, there was no need
for the General Assembly to allow nursing homes to opt
"out" of APERS if their employees were never
"in" according to § 24-4-101(14)(A). The appellees
are mistaken.
This
court reads statutes "according to the natural and most
obvious import of the language without resorting to subtle
and forced constructions for the purpose of either limiting
or extending their operation." Hines v. Mills,
187 Ark. 465, 467, 60 S.W.2d 181, 182 (1933). We exchange
"or" for "and" in a statute, moreover,
only when "the context requires that it be done to
effectuate the manifest intention of the Legislature or where
not to do so would render the meaning ambiguous or result in
an absurdity." Hines, 187 Ark. at 466, 60
S.W.2d at 182.[3]
There
is no irreconcilable conflict that compels a disjunctive
reading of § 24-4-302. First, the two provisions can be
reconciled because § 24-4-101(17) defines the term
"employees" as it is used throughout the APERS
code, including the definition of "county
employees" in § 24-4-101(14)(A). Stated another way, §
24-4-101(14)(A) defines "county employees" as
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meaning all employees (as defined in § 24-4-101(17)) whose
compensations are payable, either directly or indirectly, by
county participating public employers[.]" Indeed, as we
see it, setting aside the definition of "employee"
in § 24-4-101(17) would be contrary to the General Assemblys
intention, expressed elsewhere in that provision, to exclude
certain classes of public employees— such as those who
work seasonally or part-time— from membership in APERS.
See Ark. Code Ann. § 24-4-101(17)(B)(vii) & (viii)
(Supp. 2017). Second, § 24-4-101(17)(A)(i)(a) addresses
where the money comes from— appropriated
funds— while § 24-4-101(14)(A) speaks to who
— participating public employers— pays the
employees "directly or indirectly" from those
funds. Read together, § 24-4-101(14)(A) and §
24-4-101(17)(A)(i)(a) harmoniously provide that "county
employees" means all employees who were paid, either
directly or indirectly, from funds appropriated by county
participating public employers.
We are
also unpersuaded that Act 737 of 2011 supports a disjunctive
reading of these definitions. That the General Assembly
enacted the "opt out" provision in § 24-4-302(5) is
not evidence— as the appellees argue— that they
were eligible for membership beforehand. Indeed, "it is
a rule of statutory construction that the emergency clause of
an act can be used in determining the intent of the
legislature" Hartford Fire Ins. Co. v. Sauer,
358 Ark. 89, 97, 186 S.W.3d 229, 235 (2004), and the
emergency clause of Act 737 provides, in pertinent part, that
[i]t is found and determined by the General Assembly of the
State of Arkansas that there is confusion as to whether
Arkansas Code § 24-4-302 applies to nursing homes, assisted
living facilities, and other health care facilities owned but
not operated by counties; that this confusion has resulted in
litigation against counties; and that this act is immediately
necessary because county-owned nursing homes, assisted living
facilities, and other health care facilities that are not
operated by the county provide essential services to citizens
of the state that are substantially similar to the services
of hospitals, and without this clarification these facilities
...