IN THE SUPREME COURT OF MISSISSIPPI APPEAL NO CC PUBLIC EMPLOYEES RETIREMENT SYSTEM OF MISSISSIPPI (PERS) BRIEF OF THE APPELLEE

Transcription

1 E-Filed Document Mar :27: CC Pages: 24 IN THE SUPREME COURT OF MISSISSIPPI KAYLA VAUGHN VERSUS PUBLIC EMPLOYEES RETIREMENT SYSTEM OF MISSISSIPPI (PERS) APPELLANT APPEAL NO CC APPELLEE BRIEF OF THE APPELLEE Oral Argument Not Requested Jane L. Mapp, MSB #9618 Special Assistant Attorney General Public Employees Retirement System 429 Mississippi Street Jackson, Mississippi Telephone: (601) Fax. No. (601)

2 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI PUBLIC EMPLOYEES RETIREMENT SYSTEM VERSUS KAYLA VAUGHN APPELLANT CAUSE NO CC APPELLEE CERTIFICATE OF INTERESTED PARTIES The undersigned counsel of record certifies that the following listed people have an interest in the outcome of this case. These representations are made in order that the Justices of this Court may evaluate possible disqualification or recusal. The Board of Trustees of the Public Employees Retirement System Honorable Jane L. Mapp, Counsel for Appellant Honorable Jim Hood, Attorney General Honorable Winston Kidd, Hinds County Circuit Court Judge Honorable, Jim Warren, Counsel for Appellee Ms. Kayla Vaughn, Appellee Respectfully submitted, By: /s/ Jane L. Mapp Jane L. Mapp, MSB #9618 Special Assistant Attorney General Public Employees Retirement System 429 Mississippi Street Jackson, MS i

3 TABLE OF CONTENTS CERTFICATE OF INTERESTED PARTIES... i TABLE OF AUTHORITIES... ii,iii ORAL ARGUMENT NOT REQUESTED STATEMENT OF THE ISSUES... 1 I. Whether the Board of Trustees of the Public Employees Retirement System Erred in Denying Appellant s Claim to the Remainder of Benefits of Deceased Retiree Marjorie Ann Kahn. STATEMENT OF THE CASE... 2 STATEMENT OF THE FACTS... 2 SUMMARY OF THE ARGUMENT... 7 STANDARD OF REVIEW... 8 ARGUMENT... 9 CONCLUSION CERTIFICATE OF SERVICE ii

4 TABLE OF AUTHORITIES CASE Adams v. Baptist Mem'l Hosp.-DeSoto, Inc., 965 So.2d 652 (Miss.2007)... 8 Akins v. Miss. Dep't of Revenue, 70 So.3d 204 (Miss.2011)... 8 Buelow v. Glidewell, 757 So.2d 216 (Miss.2000)... 9 Buffington v. Miss. State Tax Comm n, 43 So.2d 450 (Miss. 2010)... 10,14 City of Belmont v. Miss. State Tax Comm'n, 860 So.2d 289 (Miss.2003)... 8 Laughlin v. Public Employees Retirement System, 11 So.3d 154 (Miss. App. 2009)... 8 Mississippi State Dep't of Health v. Baptist Mem'l Hosp.-Desoto, Inc., 984 So. 2d 967(Miss. 2008)...8 Miss. State Tax Comm'n v. Mask, 667 So.2d 1313 (Miss.1995)...9 Oktibbeha County Hosp. v. Miss. State Dep't of Health, 956 So.2d 207, 2089 (Miss.2007)...8 Queen City Nursing Ctr., Inc. v. Mississippi State Dep't of Health, 80 So. 3d 73, (Miss. 2011)..13 Public Employees Retirement System v. Dozier, 995 So. 2d 136 (Miss. App. 2008)...8 Ricks v. Miss. State Dep't of Health, 719 So.2d 173 (Miss.1998) iii

5 STATUTES & ADMINISTRATIVE CODES Miss. Code Ann (1) (Supp. 1999)... 2,3,7 Miss. Code Ann (1) (Supp. 2011)... 9,10,16 Miss. Code Ann ,6,7,9,10,11,12,14,16,17 Miss. Code Ann (Rev. 2010)...11 Miss. Code Ann (1)...5,6,12,17 Miss. Code Ann (2)...4,5,6,8,12,17 Miss. Code Ann Miss. Code Ann (Supp. 2011)...12 Miss. Code Ann Miss. Code Ann (2) (Rev. 2010)...7 iv

6 STATEMENT OF THE ISSUE I. Whether the Board of Trustees of the Public Employees Retirement System Erred in Denying Appellant s Claim to the Remainder of Benefits of Deceased Retiree Marjorie Ann Kahn. 1

7 STATEMENT OF THE CASE This matter involves an appeal filed by Shelby Kayla Vaughn ( Kayla ) 1, seeking review the Opinion and Order of the Hinds County Circuit Court entered June 21, 2013, affirming the February 28, 2012, Order of the Board of Trustees of the Public Employees Retirement System (hereinafter Board ). (R. at 34) 2. The Board adopted the Proposed Statement of Facts, Conclusions of Law, and Recommendation of the Claims Committee to deny Kayla s claim to the remainder of benefits under Option 4B-20 of deceased retiree Marjorie Ann Kahn ( Kahn ), to whom she was unrelated. (R. at 25-34). STATEMENT OF THE FACTS AND PROCEDURAL HISTORY The facts in this case are not in dispute. Marjorie Ann Kahn retired on PERS disability retirement effective November 1, 1999, and elected to receive benefits pursuant to Option 4B with 20 years certain. (R. at 55-56). See Miss. Code Ann (1) (Supp. 1999). This option would have allowed Kahn to receive monthly benefits for life, but in the event of her death before the expiration 20 years her named beneficiary or beneficiaries would receive the same monthly benefit for the remainder of the selected 20-year period which was scheduled to end October 1, (R. at 56; 70). Kahn designated her daughter, Heather Ann Vaughn ( Heather ), as her beneficiary, but failed to name a contingent beneficiary in the event of Heather s death. (R ; R. at 107; Ex. 1). Kahn actually died January 1, 2000, before any benefit payments could be paid. Thereafter, PERS began making payments to Heather as Kahn s designated Option 4B-20 1 Since Kahn s beneficiary, Heather Ann Vaughn, and the Appellant, Shelby Kayla Vaughn, share a last name, given names will be used to distinguish between them. 2 References to the Circuit Court Clerk s Papers are made as C.P. followed by the corresponding page number. References to the Administrative Record are made as R. followed by the corresponding page number. References to the Administrative Hearing Exhibits are made as Ex. followed by the corresponding exhibit number. 2

8 beneficiary. (R. at 56). Bob Rhoads, PERS Senior Policy Advisor, testified at the hearing before the Claims Committee that Heather, as Kahn s Option 4B-20 beneficiary, was not entitled to sum certain benefit upon Kahn s death, instead she was entitled to a monthly benefit, either as long as she lived, or for the balance of the 20 years, whichever occurred first. (R. at 63). PERS continued to pay monthly benefits to Heather until her own death in August (R. at 56). Upon notice and verification of Heather s death PERS staff checked Kahn s file to see if she had named a contingent beneficiary in the event her primary beneficiary died before the expiration of the 20 year period. (R. at 56-57). If Kahn had named a contingent beneficiary PERS would have paid the remaining benefits to that person. (R. at 57). A review of Kahn s file showed that she had not named a contingent beneficiary. Rhoads testified that although Kahn, as the retiree, could have named a contingent beneficiary in the event of Heather s death. However, Heather, as Kahn s beneficiary, could not have named a beneficiary of her own. Rhoads reiterated that only Kahn, as the retiree, could have designated a third person to receive any remaining benefits in the event of Heather s death prior to the end of the 20 year term. (R. at 58-59). Rhoads further testified that since Kahn did not name a contingent beneficiary PERS staff followed the mandate of Miss. Code Ann (1) which indicates where the retiree has died, and any named beneficiary has died, and there are still remaining payments under Option 4B you pay the present value of those remaining payments to the successor of the deceased retiree under Section (R. at 57). Rhoads testified that Section was actually enacted effective July 1, 2000, after Kahn s death. Prior to that time, pursuant to Section (1), Option 4B provided that the present value of the remaining payments would be payable to the estate of 3

9 the deceased member or retiree. (R. at 65). Rhoads went on to testify that he was employed by PERS in 2000 when the PERS Board of Trustees requested the new legislation as part of its proposed Legislative Package for that year. He stated that the request was made because the previous language gave PERS no alternative but to pay the present value of remaining benefits to the member/retirees estate which often required the opening or reopening of an estate many years after the member/retirees death. Rhoads stated, it was the intent of the staff and the Board to not change the fact that the present value of the remaining payments were due to the successors of the deceased member or retiree. We just wanted to find a more convenient way for the successors to make a claim directly with PERS rather than through an Estate. (R. at 67). Since Kahn did not name a contingent beneficiary and the name of Kahn s next-ofkin was not in her member file, PERS staff sent a letter addressed to Kahn s family informing them that since Kahn s named beneficiary died before the 20-year benefit period expired, the remainder of benefits, amounting to $110,163.58, would be paid to Kahn s statutory successors. The letter went on to request additional information so that the benefit could be properly paid. (R. at 57; 120; Ex. 6). Heather s family was also notified that her statutory successors were entitled to a pro-rated cost of living adjustment (COLA) for the two months in fiscal year , during which Heather was alive and receiving benefits. (R. at 57-58; 118; Ex. 5). Rhoads testified that since Heather lived for two months during the fiscal year her statutory successors under Miss. Code Ann (2) were entitled to her pro-rated share of that year s COLA which would have been paid in December. Rhoads further testified that it was the position of PERS that the pro-rated COLA was all the funds the successors of Heather are entitled to receive. (R. at 58). If there had been any un- 4

10 negotiated monthly benefit checks payable to Heather prior to her death those payments would also have been paid to Heather s successors under Section (2). After the letters were mailed regarding the remaining benefits, Toni Vaughn, Heather s stepmother contacted PERS on behalf of her own daughter, Kayla, who is Heather s half-sister. Kayla and Heather had the same father, but Kayla was no relation to Kahn whatsoever. (R. at 59). It was the position of Kayla s family that the remaining benefits should be paid to Kayla as Heather s next-of-kin and not to Kahn s heirs as contended by PERS. (R. at 60). PERS received a letter dated September 12, 2012, sent on behalf of Kayla from Hugh C. Henderson of the law firm Burttram & Henderson. In the letter, the attorney contested PERS position that the lump sum payment of Kahn s remaining benefits were to be paid to Kahn s successor under Miss. Code Ann (1) and instead argued that the payment should be paid to Kayla, as Heather s successor under Miss. Code Ann (2). (R. at 124, Ex. 8). In its response to Burttram & Henderson, PERS restated the agency s position that the actuarial equivalent of remaining benefits were due to Kahn s statutory successors. The letter further explained that as a beneficiary, Heather could not have chosen a contingent beneficiary of the account and that only a retiree can name a contingent beneficiary and Kahn had not done so. (R. at 128; Ex. 9.) PERS received another letter on behalf of Kayla dated November 2, 2011, from Jim Warren of the law firm Carroll Warren & Parker, PLLC. The letter, addressed to Angie Rivers, PERS Account Specialist, stated that Carroll Warren & Parker now represented Kayla and reasserted her contention that Kahn s remaining benefits should be paid to Kayla, as Heather s successor, pursuant to Miss. Code Ann (2). Warren requested a 5

11 hearing pursuant to Miss. Code Ann if PERS maintained its position that payment should instead be paid to Kahn s heirs pursuant to Miss. Code Ann (1). (R. at 130; Ex. 10). November 8, 2011, Pat Robertson, PERS Executive Director, sent an administrative decision letter to Kayla s attorney reiterating the position of PERS in part as follows: Section (1) applies to benefits that are the property of the deceased member and that become payable to the successors of the deceased member in the absence of a named beneficiary. Section (2) applies specifically to monthly benefits due and payable to a beneficiary who dies before he or she has the opportunity to negotiate or cash a check or checks issued before his or her death. Because monthly benefits are no longer payable to a beneficiary receiving monthly benefits upon his or her death, no further benefits were payable to Ms. Heather Ann Vaughn upon her death; thus, no benefits are payable to Ms. Heather Ann Vaughn s successor(s) from PERS. Upon receipt of the agency s final administrative decision, Kayla, through her attorney, timely filed a Notice of Appeal to the PERS Board of Trustees. A hearing was held before the Claims Committee of the Board of Trustees on January 24, Following the Claims Hearing a Proposed Statement of Facts, Conclusions of Law, and Recommendation to the Board was made by the committee. The committee found that the actuarial equivalent of the remaining payments are to be paid to the statutory successors of the deceased member/retiree, Marjorie Ann Kahn, as listed in Section (1) because the designated beneficiary, Heather Ann Vaughn, was deceased when such benefits would have become payable, and Ms. Kahn did not designate a contingent beneficiary. (R. at 46). The Board adopted the Proposed Statement of Facts, Conclusions of Law, and Recommendation of the Claims Committee to deny Kayla s claim to the remainder of benefits under Option 4B-20 of deceased retiree Marjorie Ann Kahn. (R. at 37). Aggrieved, Kayla filed a Notice of Appeal to the Hinds County Circuit Court as authorized by Miss. 6

12 Code Ann (2) (Rev. 2010). (C.P. at 3). The Circuit Court granted Kayla s request for preliminary injunction enjoining PERS from distributing funds from Kahn s account during the pendency of the appeal. (C.P. at 34-36). Following briefing by both parties, the Circuit Court entered its Opinion and Order dated June 21, 2013, affirming the decision of the PERS Board. (C.P. at 37-42). June 28, 2013, Kayla filed a Motion for Reconsideration, to Alter or Amend Judgment, or New Trial, and to Continue Preliminary Injunction. (C.P. at 43). In an Order entered July 9, 2013, the Circuit Court denied Kayla s Motion for Reconsideration, to Alter or Amend Judgment, or New Trial, but granted her request to continue the preliminary injunction during the pendency of any appeal. Subsequently, Kayla filed her Notice of Appeal to the Supreme Court on July 9, SUMMARY OF THE ARGUMENT The Order and decision of the PERS Board of Trustees in this matter is based on a reasonable interpretation of Miss. Code Ann (1) and Miss. Code Ann and should therefore be affirmed. Both Kahn and her named beneficiary died before receiving all guaranteed payments due under the retirement option selected by Kahn at her retirement. For this reason PERS was required to determine the rightful recipient of those benefits that became payable after the death of Kahn s named beneficiary. Pursuant to (1), when such a situation occurs the actuarial equivalent of the remaining payments shall be paid under Section (1). Pursuant to (1), the present value of Kahn s remaining benefits are to be paid to her statutory heirs. As Kayla is in no way related Kahn, the deceased retiree, she is not entitled to the remainder of Kahn s Option 4B- 20 retirement benefits. 7

13 Kayla is only entitled to those monies which fall under the narrow exception found in (2). This exception to Subsection (1) states that a deceased beneficiary s heir is entitled to those benefits which were payable to the beneficiary prior to his or her death. This would only include monthly benefit checks issued before the beneficiary s death which had not been cashed or a pro-rated COLA payment applicable to the months of the fiscal year the beneficiary was alive. Because monthly benefits are no longer payable to a beneficiary following his or her death, no further benefits were payable to Heather Ann Vaughn upon her death. Since no future benefits are payable from PERS to Heather s successor(s), the PERS Board did not err in finding that Kayla, who is unrelated to the deceased retiree, is not entitled to the remainder of her Option 4B-20 retirement benefits. STANDARD OF REVIEW Generally, this Court s review is limited to a determination of whether the Board of Trustees decision was: (1) supported by substantial evidence; or (2) was arbitrary or capricious; or (3) was beyond the authority of the Board to make; or (4) violated a statutory or constitutional right of Shelby Kayla Vaughn. Laughlin v. Public Employees Retirement System, 11 So.3d 154, 158 (Miss. App. 2009); Public Employees Retirement System v. Dozier, 995 So. 2d 136, 138 (Miss. App. 2008) Nevertheless, when issues involve questions of law judicial review is de novo. Oktibbeha County Hosp. v. Miss. State Dep't of Health, 956 So.2d 207, (Miss.2007); City of Belmont v. Miss. State Tax Comm'n, 860 So.2d 289, 295 (Miss.2003). Statutory interpretation is also a matter of law, and is to be reviewed de novo. Akins v. Miss. Dep't of Revenue, 70 So.3d 204, 208 (Miss.2011) (citing Adams v. Baptist Mem'l Hosp.-DeSoto, Inc., 965 So.2d 652, 655 (Miss.2007)). However, even when a de novo 8

14 standard of review for questions of law is applicable, the reviewing court is still required to accord great deference to an administrative agency's construction of its own rules and regulations and the statutes under which it operates. Buelow v. Glidewell, 757 So.2d 216, 219 (Miss.2000) (citing Miss. State Tax Comm'n v. Mask, 667 So.2d 1313, 1314 (Miss.1995) (internal citations omitted). In fact an agency's interpretation of a regulation it has been authorized to promulgate is entitled to great deference and must be upheld unless it is so plainly erroneous or so inconsistent with either the underlying regulation or statute as to be arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. Mississippi State Dep't of Health v. Baptist Mem'l Hosp.-Desoto, Inc., 984 So. 2d 967, 981 (Miss. 2008) (quoting Buelow, 757 So.2d at 219) (emphasis in original). ARGUMENT I. Whether the Board of Trustees of the Public Employees Retirement System Erred In Denying Appellant s Claim to the Remainder of Benefits of Deceased Retiree Marjorie Ann Kahn. PERS retiree, Marjorie Ann Kahn, and her designated beneficiary, Heather, both died before all guaranteed payments due under Kahn s selected benefit option, 4B with 20 years certain, were paid. Because Kahn did not name a contingent beneficiary to receive any remaining benefits in the event of Heather s death, PERS was required to look to statute to determine how the remaining benefits should be distributed. Pursuant to Miss. Code Ann (1) (Supp. 2011) when Option 4B is selected and the retired member or the last designated beneficiary both die before receiving all guaranteed payments due, the actuarial equivalent of the remaining payments shall be paid under Section (1). The question before the Claims Committee of the PERS Board, and now this Court, is whether Miss. Code Ann (1) and (1) require that the actuarial equivalent of 9

15 the remaining payments be paid to the statutory successors of the retiree or to the statutory successors of the retiree s named beneficiary. While Kayla attempts to argue that the statutes are plain and unambiguous, the parties have a decidedly difference in interpretation of these statutes. The Supreme Court in Buffington v. Miss. State Tax Comm n, 43 So.2d 450 (Miss. 2010), in discussing the review of an agency s interpretation of a statute, opined as follows: An agency's interpretation of a rule or statute governing the agency's operation is a matter of law that is reviewed de novo, but with great deference to the agency's interpretation. This duty of deference derives from our realization that the everyday experience of the administrative agency gives it familiarity with the particularities and nuances of the problems committed to its care which no court can hope to replicate. However, if an agency's interpretation is contrary to the unambiguous terms or best reading of a statute, no deference is due. An agency's interpretation will not be upheld if it is so plainly erroneous or so inconsistent with either the underlying regulation or statute as to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. In addition, this Court has established the following regarding statutory interpretation: We will not engage in statutory interpretation if a statute is plain and unambiguous. However, statutory interpretation is appropriate if a statute is ambiguous or is silent on a specific issue. In either case, the ultimate goal of this Court is to discern the legislative intent. The best evidence of legislative intent is the text of the statute; the Court may also look to the statute's historical background, purpose, and objectives. If a statute is ambiguous, it is this Court's duty to carefully review statutory language and apply its most reasonable interpretation and meaning to the facts of a particular case. Id. at 454 (internal citations and quotations omitted). It should be noted at the outset that Section (1) specifically states that when the retiree and named beneficiary both die prior to receiving all guaranteed benefits under Option 4-B then the remainder is to be paid under Subsection (1) of The statute does not refer to the more general as a whole. This goes to the intent of 10

16 the Legislature that remaining payments are to be paid to the retiree s heirs under Section (1). Miss. Code Ann (Rev. 2010) reads as follows: (1) Except as otherwise provided in subsection (2) of this section, where benefits are payable to a designated beneficiary or beneficiaries under this article and the designated beneficiary or beneficiaries as provided by the member on the most recent form filed with the system is deceased or otherwise disqualified at the time such benefits become payable, the following persons, in descending order of precedence, shall be eligible to receive such benefits: (a) The surviving spouse of the member or retiree; (b) The children of the member or retiree or their descendants, per stripes; (c) The brothers and sisters of the member or retiree or their descendants, per stripes; (d) The parents of the member or retiree; (e) The executor or administrator on behalf of the member or retiree s Estate; (f) The persons entitled by law to distribution of the member or retiree s Estate. (2) 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 Section still payable at the death of a beneficiary receiving monthly benefits shall be paid as follows: (a) The surviving spouse of beneficiary; (b) The children of the beneficiary or their descendants, per stripes; (c) The brothers and sisters of the beneficiary or their descendants, per stripes; (d) The parents of the beneficiary; (e) The executor or administrator on behalf of the beneficiary s Estate; (f) The persons entitled by law to distribution of the beneficiary s Estate. The Appellant, Kayla, who is the half-sister of Heather, but no relation to Kahn, maintains that Section (2) is applicable to this situation and that the actuarial equivalent of all remaining payments should be paid to her as Heather s heir rather than to 11

17 the successor(s) of Kahn. Kayla contends that upon Kahn s death, sum certain benefits were payable to Heather for the remainder of the 20 year period; and therefore, pursuant to Section (1), upon Heather s death the balance should be paid to her successors under Section (2). She argues that the balance would have only gone to Kahn s successors under Section (1) had Heather predeceased Kahn. She states that in such an instance no benefits would have ever been payable to Heather; and therefore, Section (2) would not have come into play. In short, Kayla argues that a plain reading of Section mandates that if the beneficiary is deceased when the benefits become payable, the lump sum benefit should be paid to the retirant s heirs [but] if the beneficiary is alive when the benefits become payable, the lump sum remainder is to be paid to the beneficiary s heirs. (Appellant s Brief at p.6). PERS has a completely different interpretation of Section (1) which seems to be in part related to when benefits become payable. Monthly benefits under Option 4B are only payable to a beneficiary as long as that beneficiary is alive. Therefore, subsection (2) of Miss. Code Ann only refers to those benefits that were due and owing to a beneficiary prior to or at the time of his or her death. This would include a monthly benefit check payable prior to death, but not yet cashed, or a pro-rated COLA due under Miss. Code Ann (Supp. 2011). These are the only benefits that are to be paid to a beneficiary s statutory successor(s) as listed in Section (2) because they are the only benefits that were payable to the beneficiary at the time of his or her death. The actuarial equivalent of the remaining payments; however, are to be paid to the member/retiree s statutory successor(s) as listed in Section (1) since at the time they would become payable the beneficiary would be deceased. 12

18 Heather, as the named beneficiary, did not have the option of taking the equivalent of the Kahn s total remaining benefit in a lump sum in lieu of monthly benefit payments. This fact is evidence that there was never a sum certain benefit that vested in Heather, instead she was only entitled to each month s benefit as it came due for the balance of the 20 year period or until her death, whichever came first. In short, a plain reading of the statute clearly indicates that Kayla, as Heather s heir, is only entitled to those benefits payable to Heather at the time of her death, not future monthly benefits. The present value of those future benefits which would become payable after Heather s death remain the property of the deceased retiree, Kahn, and are to be paid to her statutory successors. Contrary to Kayla s repeated assertion, PERS interpretation and application of the statute does not disregard the opening clause in subsection (1) which states [e]xcept as otherwise provided in subsection (2) of this section. Instead PERS has applied the plain meaning of the statute that past due benefits and a pro-rated COLA are the only exceptions to be paid under subsection (2) of the statute and that remaining future benefits that were not yet payable at the time of the beneficiary s death are always to be paid under subsection (1). Although it is PERS contention that it correctly applied the plain meaning of the statute, the mere fact that PERS and Kayla have two such difference interpretations of the statute is evidence that the statute may be considered somewhat ambiguous. As stated above, it is well settled law that an agency s interpretation of a statute it is responsible for administering must be accorded deference and must be upheld as long as the interpretation is reasonable. Therefore, unless PERS interpretation of the relevant statutes is repugnant to the plain meaning thereof, the court is to defer to the agency's interpretation. Queen City 13

19 Nursing Ctr., Inc. v. Mississippi State Dep't of Health, 80 So. 3d 73, 84 (Miss. 2011) (quoting Ricks v. Miss. State Dep't of Health, 719 So.2d 173, 179 (Miss.1998)). Kayla argues that her interpretation of the statutes that a beneficiary s heirs should take precedence over a retiree s heirs makes sense. PERS, however, finds this interpretation to be ripe with the potential for egregiousness. Using Kayla s interpretation of the statute the following scenarios could easily occur: Example A: A retiree names her husband as her Option 4B-20 beneficiary. Both the retiree and her husband have children from previous marriages. If following the retiree s death her husband also dies before the guaranteed term is up then under Kayla s interpretation of the statute it would be the husband s children who would get the remaining benefit, not the retiree s own biological children. Example B: A retiree who is married with children designates her husband as her Option 4B-20 beneficiary. If the husband remarries following the retiree s death and then dies himself before the benefit period is up, then under Kayla s interpretation of the statute it would be the husband s new wife who would receive the retiree s remaining benefits and not the retiree s own natural children. Under PERS interpretation of the statute the retiree s remaining benefit would always be paid to the retiree s own statutory heirs, not the possibly unrelated heirs of her beneficiary. Clearly, Kayla s interpretation of the statute does not make sense. As stated by the Court in Buffington, 43 So.2d at 454, when interpreting a statute the ultimate goal is to discern the legislative intent. Bob Rhoads, PERS Policy Advisor, was an employee of PERS in 2000 when Miss. Code Ann was enacted. He testified the new legislation was actually introduced at the request of PERS as part to the Board s Legislative Package in Prior to the passage of Section , upon the 14

20 death of both the member/retiree and all named beneficiaries the present value of all remaining benefits were to be paid to the member/retiree s estate. This was often time consuming and expensive since the member/retiree may have been dead for a number of years and the remaining benefit may have been small. According to testimony, in requesting this legislation PERS did not intend to change the fact that the remaining benefits would still be paid to the successors of the member/retiree, but to merely simplify the process by naming those successors in statute, thereby eliminating the need to go through the estate process. As the Committee stated in its recommendation to the Board, if the legislative intent was that the actuarial equivalent of remaining benefits are to be paid to a beneficiary s successors unless the beneficiary predeceases the member/retiree the Legislature would have made that the default successor provision. It would have only been reasonable for the language in the statute s first subsection to state that remaining benefits are to be paid to the beneficiary s successor except when the beneficiary predeceases the member/retiree and no living contingent beneficiary has been named. The placement of the provision regarding successors of the member/retiree as subsection (1) of the statute shows the Legislature s intent that it be the default provision, with subsection (2) coming into play only in certain limited circumstances. It is illogical that legislative intent would be that subsection (1) of the statute would only apply in the unusual and infrequent situation where a beneficiary actually predeceases a member/retiree and the member/retiree failed to name a new or contingent beneficiary. PERS interpretation is further supported by the fact the named beneficiary is not entitled to take the actuarial equivalent of the remaining benefit in a lump sum and that only the member/retiree may name a contingent beneficiary. The primary beneficiary is only 15

21 entitled to monthly benefit payments and has no right to name his or her own beneficiary. This shows that a beneficiary, even once payments begin, never has a property interest in the entire account, only in each monthly benefit as it comes due and payable. The fact that Kahn could have named a contingent beneficiary to receive the remaining benefit upon Heather s death but Heather could not have named a beneficiary in the event of her own death further illustrates that Heather never owned the account and PERS must pay any remaining benefits to Kahn s statutory successors since the account remained the property of Kahn. Kayla argues that the fact that Kahn did not name a contingent beneficiary should be taken as proof that Kahn wished Heather s heirs to be paid the remaining benefits. (See Appellant s Brief at page 10). The law in effect at the time Kahn retired totally negates this specious argument. At the time of Kahn retirement and her death, Miss. Code Ann had not yet been enacted into law. Instead, at that time Miss. Code Ann (1) (Option 4-B) stated in pertinent part, that [i]f the retired member or the last designated beneficiary receiving annuity payments dies prior to receiving all guaranteed payments due, the actuarial equivalent of the remaining payments would be paid to the estate of the retired member as intestate property. Consequently, it could not have been Kahn s expectation or her intent that any benefits would ever be paid to Heather s successors, even in the event of Heather s death before the guaranteed benefit period was up. Quite the opposite, based on the law at that time, it would have been Kahn s expectation, and apparently her wish since she did not name a contingent beneficiary, that any remaining benefits would be paid to her own heirs through her Estate. These heirs would not have included Kayla. The Circuit Court also agreed with PERS interpretation of the statutes and it handling of Kahn s account. In its June 21, 2013, Opinion and Order the lower court held: 16

22 A deceased beneficiary s successor under Subsection (2) of Miss. Code Ann is only entitled to monthly benefits due and payable [to] the beneficiary prior to his or her death. This would only include monthly benefit checks issued before the beneficiary s death which had not been cashed or a pro-rated COLA payment applicable to the months of the fiscal year the beneficiary lived. Because monthly benefits are no longer payable to a beneficiary following his or her death, no further benefits were payable to Heather Ann Vaughn upon her death. Thus, no future benefits are payable from PERS to Heather s successor(s). Instead, subsection (1) of Miss. Code Ann is applicable in this case where Kahn has remaining retirement benefits that became due and payable after Heather s death. Pursuant to (1), the present value of Kahn s remaining benefits are to be paid to her statutory successors. The Board did not err in finding that Kayla, who is in no way related to the deceased retiree, is not entitled to the remainder of deceased retiree Marjorie Ann Kahn s Option 4B-20 retirement benefits. The Court therefore finds that PERS decision to deny Kayla Vaughn the remainder of the retirement benefits was supported by substantial evidence and was therefore, not arbitrary and capricious. In summary, pursuant to Miss. Code Ann (2), Kayla, as Heather s statutory successor, is only entitled to those monthly benefits or pro-rated COLA that were payable to Heather prior to or at the time of her death. The actuarial equivalent of the remaining payments; however, are to be paid to Kahn s statutory successors as listed in Section (1) because Heather, her designated beneficiary, was deceased when such benefits would have become payable. 17

23 CONCLUSION PERS interpretation of Miss. Code Ann is not so plainly erroneous or inconsistent with the language of the statute as to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law; and therefore, the Board and the Circuit Court s decisions in this matter should be affirmed. Respectfully submitted this the 11 th day of March, PUBLIC EMPLOYEES RETIREMENT SYSTEM OF MISSISSIPPI APPELLEE JIM HOOD ATTORNEY GENERAL By: /s/ Jane L. Mapp Jane L. Mapp Special Assistant Attorney General Jane L. Mapp, MSB# 9618 Special Assistant Attorney General Public Employees Retirement System 429 Mississippi Street Jackson, Mississippi Telephone: (601) Fax. No.: (601) Mississippi Bar No

24 CERTIFICATE OF SERVICE I, Jane L. Mapp, the undersigned hereby certifies that a true and correct copy of the above and foregoing Brief of Appellee has been filed with the Clerk of the Court using the MEC system which sent notification of such to the following and also was mailed, postage pre-paid, to: Jim Warren, Esq. Jacob Stutzman, Esq. Carroll Warren & Parker, PLLC Post Office Box 1005 Jackson, MS Honorable Winston L. Kidd Hinds County Circuit Court P. O. Box 327 Jackson, MS This, the 11 th day of March, /s/ Jane L. Mapp Jane L. Mapp, MSB 9618 Special Assistant Attorney General 19