South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
William J. Warlick vs. SCBCB

AGENCY:
South Carolina Budget and Control Board

PARTIES:
Petitioners:
William J. Warlick

Respondents:
South Carolina Budget and Control Board, South Carolina Retirement Systems,
 
DOCKET NUMBER:
07-ALJ-30-0510-CC

APPEARANCES:
William J. Warlick
Petitioner, pro se

Justin R. Werner, Esquire
For Respondent

South Carolina Budget and Control Board, South Carolina Retirement Systems
 

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.[1] 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.[2] 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.”).[3] 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.[4] 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



[1] Option B, one of the payment options that replaced the old numerically identified options when Section 9-1-1620 was rewritten in 2000, is similar to Option 2 and pays “[a] reduced retirement allowance payable during the retired member’s life, which continues after the member’s death for the life of the member’s designated beneficiary or, if the member selects multiple beneficiaries, which continues after the member’s death in equal shares to and for the life of each of two or more beneficiaries.” S.C. Code Ann. § 9-1-1620(A) (Supp. 2006).

[2] Because the reduced retirement allowance payable under Options B and C (and Options 2 and 3 under earlier versions of Section 9-1-1620) is derived from an actuarial calculation based upon the ages of the named beneficiaries for the survivorship benefits paid under the options, a change of a survivorship beneficiary requires an actuarial recalculation of the retiree’s retirement allowance, just as would be required for a change in the type of option itself. Therefore, a change of a beneficiary for the survivorship benefits under Options B and C is considered a change in the form of a retiree’s benefit payments for the purposes of the Retirement Code and accompanying regulations.

[3] Notably, these prior versions of Section 9-1-1620 also did not contain the current restriction that limits a retiree to two lifetime changes in the form of his benefits and upon which Petitioner bases much of his argument regarding the proper interpretation of Section 9-1-1620. See, e.g., Act No. 458, Part II, § 47A, 1996 S.C. Acts 2874, 3417-18. Without such a restriction, Petitioner’s reading of Section 9-1-1620 would lead to the absurd result of allowing a retiree to make unlimited lifetime changes in the form of his benefit payments based upon a single change in marital status.

[4] Unfortunately, the death of one beneficiary, where the member has named multiple beneficiaries under a survivorship option, is not a qualifying event for a change of payment option. Rather, a survivorship option may only revert to a maximum benefit if all of the member’s designated beneficiaries predecease the member. See S.C. Code Ann. § 9-1-1620(A).


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