ORDERS:
ORDER GRANTING RESPONDENT’S MOTION FOR SUMMARY JUDGMENT
STATEMENT
OF THE CASE
The
above-captioned case is before the Court pursuant to S.C. Code Ann. § 9-21-60 (Supp. 2006) upon the request of Petitioner William J. Warlick (“Petitioner”) for
a contested case hearing. In this matter, Petitioner challenges Final Agency
Determination No. 07-026, issued by Respondent South Carolina Budget and
Control Board, South Carolina Retirement Systems (“Retirement Systems”), in
which the Retirement Systems denied his request to change the form of his
monthly retirement benefits. On November 7, 2007, Respondent Retirement Systems filed a Motion for Summary Judgment, in which it contends that there is
no genuine issue as to any material fact in this case and that it is entitled
to judgment in its favor as a matter of law under the applicable statutes and
regulations. Petitioner filed a response in opposition to the Motion for
Summary Judgment on November 16, 2007. The Court heard arguments on the
Retirement Systems’ Motion for Summary Judgment on Tuesday, November 20, 2007, at the Administrative Law Court in Columbia, South Carolina. Having fully
considered the arguments presented at that hearing and in the parties’ previous
filings and having carefully examined the applicable law, I find that the
Retirement Systems’ Motion for Summary Judgment must be granted for the reasons
set forth below.
BACKGROUND
Regrettably,
this matter comes before the Court upon an unfortunate set of circumstances.
Petitioner William J. Warlick (“Petitioner”) is a retired member of the South
Carolina Retirement System (“SCRS” or “System”), who retired from state
employment on June 2, 1988. Upon his retirement, Petitioner elected to have
his retirement benefits paid under “Option 2,” an optional form of benefit
payments that would pay Petitioner “[a] reduced retirement allowance payable
during [his] life, with the provision that it shall continue after his death to
and for the life of the beneficiary nominated by him . . . if such person survives
him.” S.C. Code Ann. § 9-1-1620 (Supp. 1987). In making that election,
Petitioner named his wife, Joan Warlick, as the beneficiary for the
survivorship benefits paid under Option 2.
However,
Joan Warlick predeceased her husband, passing away on August 21, 2006. Following his wife’s death, Petitioner submitted a Retired Member Change of
Beneficiary Form to the Retirement Systems on September 1, 2006, along with a copy of his wife’s death certificate. On the form, Petitioner requested a
change in the form of his retirement benefits—identifying the death of his
spouse as the qualifying event—and elected to have his benefits paid under
“Option B,” with his son, William J. Warlick, Jr., and daughter, Beverly J.
Eslick, as beneficiaries for the survivorship benefits.
The Retirement Systems approved the requested change on September 14, 2006, with an effective date of September 1, 2006, for the new form of benefits.
Sadly, Petitioner’s son, William J. Warlick, Jr., passed away only a few months
later, on December 20, 2006. On February 20, 2007, Petitioner submitted another Retired Member Change of Beneficiary Form to the Retirement Systems, in
which he sought to continue his benefits under Option B, but to name his
daughter, Beverly Eslick, as the sole beneficiary for the survivorship
benefits. Because this request was not made in response to a change in marital
status, the Retirement Systems denied Petitioner’s request to change the
beneficiary of his survivorship benefits under Option B.
By a
letter dated August 2, 2007, Petitioner sought review of the initial denial of
his request to change the form of his benefit payments. After reviewing
Petitioner’s claim, the Retirement Systems issued Final Agency Determination
No. 07-026, which again denied his request to change the beneficiary for his
survivorship benefits. Petitioner now challenges that Final Agency
Determination in this contested case proceeding.
DISCUSSION
In
this matter, Respondent Retirement Systems has moved for summary judgment pursuant
to Rule 56, SCRCP, and ALC Rules 19(A) and 68, contending that there are no
genuine issues of material fact in dispute in this case and that it is entitled
to judgment in its favor as a matter of law. Summary judgment is appropriate
in a case when it is clear that there is no genuine issue of material fact and
that the moving party is entitled to judgment as a matter of law. Rule 56(c),
SCRCP; see also, e.g., Brandt v. Goodling, 368 S.C. 618, 626, 630
S.E.2d 259, 263 (2006). Accordingly, where no further development of the facts
is necessary to clarify the application of a statute, summary judgment is a
proper means of disposing of a purely legal question of statutory
interpretation, even where the case presents a novel issue of statutory
construction. See, e.g., Med. Univ. of S.C. v. Arnaud, 360 S.C.
615, 620 n.6, 602 S.E.2d 747, 749 n.6 (2004). In this matter, there is no
dispute between the parties as to the material facts underlying the case.
Rather, the sole dispute in the instant case concerns the proper interpretation
of S.C. Code Ann. § 9-1-1620(B)(1) (Supp. 2006) as it relates to Petitioner’s
second request to change the form of his retirement benefit payments.
On
that question, the Retirement Systems contends that it has properly interpreted
Section 9-1-1620(B)(1) to require a separate and distinct change in marital
status for each request by a retiree to change the form of his benefit
payments. Petitioner, however, argues that he should be allowed to make a
second change in the form of his benefit payments based upon a single change in
marital status, the death of his spouse. Specifically, Petitioner contends that
Section 9-1-1620(B)(1) allows a retiree to make unrestricted changes in the
form of his benefit payments within one year after a change in marital status,
subject only to S.C. Code Ann. § 9-1-1620(B)(2) (Supp. 2006), which limits a
retiree to making two lifetime changes in the form of his retirement benefits.
However, when the plain language, legislative history, and Retirement Systems’
long-standing construction of Section 9-1-1620 are examined, it becomes
apparent that Section 9-1-1620(B)(1) only permits a retiree to make a single
change in the form of his retirement benefits in response to a change in his
marital status.
Initially,
it should be noted that, as a general rule, a retiree is not permitted to
change the form of his benefit payments, or change the beneficiary for any
survivorship benefits under a chosen payment option, after he has begun
receiving his retirement allowance. See 23A S.C. Code
Ann. Regs. 19-912 (1976) (“Retirees cannot be granted privilege of changing
option after benefit payments are begun.”). Section 9-1-1620 does, however, set out two limited exceptions to this general rule prohibiting a retiree from
changing the option for his retirement benefits. First, if a member has
selected one of the survivorship payment options under Section 9-1-1620(A)—i.e., Option B or Option C—and “all of the designated beneficiaries
predecease the member,” the member’s form of payment will automatically revert
to the maximum retirement allowance payable to the member under law. S.C. Code
Ann. § 9-1-1620(A) (Supp. 2006) (emphasis added). Second, Section
9-1-1620(B)(1) provides that a retiree may elect a new form of benefit payments
in response to a change in marital status, namely, marriage, divorce, or the
death of a spouse:
A retired member,
within one year after a change in marital status, may revoke the form of
monthly payment elected and elect a new form of monthly payment, which must be
the actuarial equivalent of the maximum retirement allowance payable to the
member under law. The new form of monthly payment is effective on the first
day of the month in which the new form of monthly payment is elected.
S.C. Code Ann. §
9-1-1620(B)(1). But, these exceptions to the general prohibition upon changes
in option are not without limitation. Whether a retiree’s form of payment is
changed by his election upon a change in marital status or by an automatic
reversion to the maximum benefit upon the death of all of his designated
beneficiaries, a retiree’s form of monthly payment may not be changed more than
twice during his lifetime. S.C. Code Ann. § 9-1-1620(B)(2).
While
Section 9-1-1620(B)(2) does allow a retiree, when eligible, to make two changes
of option in his lifetime, it is clear that the plain language of Section 9-1-1620(B)(1)
only contemplates that a retiree will make a single change of option in
response to a single change in marital status. Not only is the entire section
phrased in the singular number, but the procedure for electing a new option set
forth in the section also suggests a single option change in response to a
change in marital status. See S.C. Code Ann. § 9-1-1620(B)(1). Specifically, Section 9-1-1620(B)(1) provides that, after a change in marital status,
a retired member may revoke the form of monthly payment previously elected and
elect a new form of monthly payment. Id. This two-step procedure is
not a blanket authorization for a retiree to make multiple changes in the form
of his benefits throughout the year following a change in his marital status,
but rather only contemplates that a retiree who has had a change in marital
status will first revoke the payment option selected before the change in
status and then make a one-time election of a new payment option in response to
the change.
This
reading of Section 9-1-1620(B)(1) is consistent with the legislative history of
that section and its change-of-option provisions. Cf. Wade v.
Berkeley County, 348 S.C. 224, 230-31, 559 S.E.2d 586, 589 (2002) (noting
that, in construing a statute, the court could not “ignore the clear
legislative history” of the statute, such that the court’s construction of the
statute was ultimately “limited by its legislative history”). Prior to 1986,
Section 9-1-1620 did not permit a retiree to change the form of his retirement
benefits after a change in marital status of any type. See S.C. Code
Ann. § 9-1-1620 (1986). In fact, the sole means by which a retiree could
change the form of his retirement payments before 1986 was through a reversion
to the maximum benefit if the beneficiaries for his survivorship benefits
predeceased him and he had selected, at retirement, a payment option that
provided for such a reversion. Id. Over the next fourteen years,
Section 9-1-1620 was amended several times to allow a retiree to change his
option under other circumstances, such as divorce, see Act No. 540, Part
II, § 23A, 1986 S.C. Acts 3984, 4895-97; the death of a spouse, see Act
No. 412, § 1, 1990 S.C. Acts 1978, 1979-80; and, later, any change in marital
status, see Act No. 336, § 1, 1992 S.C. Acts 1993, 1994. However, throughout
all of these amendments, it remained clear that the change of option authorized
by Section 9-1-1620 was intended to provide a retiree with a single chance to
revoke his prior form of payment and select a new form of payment to reflect a
change in his marital status. See, e.g., Act No. 458, Part II, § 47A,
1996 S.C. Acts 2874, 3417-18 (“The revocation of the prior nomination and the
election of a new option after the death of the member’s spouse must be made
before the first anniversary of the death of the spouse.”); Act No. 336, § 1,
1992 S.C. Acts 1993, 1994 (“A new option may be elected after a change in
marital status.”). In short, it is apparent
from the plain language of both current and prior versions of Section 9-1-1620
that the change-of-option provision contained in Section 9-1-1620 is intended
to serve as a narrowly tailored exception to the basic rule prohibiting changes
of option after retirement that affords a retiree a one-time opportunity to
select a new form of benefit payments in response to a change in marital
status.
Given
this statutory language, the Retirement Systems has long construed Section 9-1-1620 to require a retiree to have a unique, independent qualifying event—specifically,
a change in marital status, such as a marriage, divorce, or death of a
spouse—for each change of option requested by the retired member. This interpretation
of Section 9-1-1620 is consistent with the plain language of the statute and
has been the consistent position of the Retirement Systems throughout its
administration of the change-of-option provisions of Section 9-1-1620. Consequently, this Court will afford the Retirement Systems’ interpretation of Section 9-1-1620(B)(1) some deference and will not reject that interpretation in the absence of
compelling reasons to the contrary. See, e.g., Comm’rs of Pub. Works
v. S.C. Dep’t of Health & Envtl. Control, 372 S.C. 351, 359, 641 S.E.2d
763, 767 (Ct. App. 2007) (“Generally, ‘the construction of a statute by the
agency charged with its administration will be accorded the most respectful
consideration and will not be overruled absent compelling reasons.’”). In sum,
based upon the plain language of Section 9-1-1620(B)(1), its legislative
history, and its long-standing interpretation by the Retirement Systems, it is
clear that any change of in the form of benefit payments requested under that
section must be made in response to a unique, independent qualifying event.
In
the case at hand, Petitioner seeks to make a second change in the form of his
retirement benefits based upon a single qualifying event, the death of his
spouse. As authorized by Section 9-1-1620(B)(1), Petitioner timely made an
election to change the form of his retirement benefits upon the passing of his
wife in August 2006, changing his form of payments from Option 2 with his wife
as the survivorship beneficiary to the new Option B with his two children as
beneficiaries for the survivorship benefits. However, Petitioner now seeks to
change the designated beneficiaries for the survivorship benefits under Option
B based upon the death of one of his beneficiaries. Although this request was
made within one year of the death of his wife, it was not made in response to a
second, independent change in marital status. Accordingly,
Petitioner’s request is not authorized by Section 9-1-1620(B)(1) and was properly refused by the Retirement Systems. Therefore, while this Court is sympathetic
to the unfortunate circumstances that have affected Petitioner and finds the
motivation behind his request to be reasonable, it believes that the law in
this case ultimate requires that summary judgment be granted in favor of the
Retirement Systems.
ORDER
As
there are no genuine issues as to any material facts in this matter and as the
Retirement Systems has properly denied Petitioner’s second request to change
the form of his benefit payments pursuant to Section 9-1-1620(B)(1), I find
that the Retirement Systems is entitled to judgment in its favor in this case as
a matter of law. Therefore,
IT
IS HEREBY ORDERED that Respondent South Carolina Retirement Systems’ Motion
for Summary Judgment is GRANTED.
AND
IT IS SO ORDERED.
______________________________
The
Honorable John D. McLeod
Administrative
Law Judge
December 3, 2007
Columbia, South Carolina
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