ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before the South Carolina Administrative Law Court (“ALC” or “Court”) pursuant to the Request for Contested Case Hearing filed by Crystal D. Richardson (“Richardson” or “Petitioner”) on October 20, 2009 in the above-captioned matter. Richardson contests the Final Agency Determination issued by the South Carolina Budget and Control Board, South Carolina Retirement Systems (“SCRS” or “Retirement Systems”) affirming the payment of active member death benefits to Delbert S. Washington (Washington) based upon SCRS’s acceptance of an Active Member Beneficiary Form for Colista Richardson (Decedent) dated February 24, 2009. The Retirement Systems thereafter filed a Motion for Joinder of Necessary Party requesting that Washington be joined as a party to the dispute. No one objected to the Motion, and the Court issued an Order granting the motion on January 19, 2010.
After timely notice to the parties, a hearing in this matter was held before me on March 16, 2010, at the offices of the South Carolina Administrative Law Court in Columbia, South Carolina.
The sole issue before the Court is whether the February 24, 2009 Active Member Beneficiary Form meets the statutory requirements for a beneficiary designation under SCRS such that it should be honored for the payment of Decedent’s active member death benefits.
FINDINGS OF FACT
Having carefully considered all testimony, exhibits, and arguments presented at the hearing of this case, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:
1. The Petitioner, Crystal D. Richardson, is the sister of Colista Richardson Washington (“Decedent”), a member of the South Carolina Retirement Systems who passed away on April 1, 2009. Upon first enrolling in the Retirement Systems in October 1991, Decedent designated her mother, Carolyn Richardson-Mikell, and the Petitioner as the beneficiaries of her retirement benefits under SCRS. In 1998, Decedent terminated her employment under SCRS and withdrew her contributions from the System. Decedent became re-employed under the System in November 1999, and thereafter on July 14, 2000, the Decedent submitted an SCRS Enrollment Form and accompanying Beneficiary Form to SCRS. The Beneficiary Form designated the Petitioner as the sole beneficiary of Decedent’s retirement benefits under the System. However, by letter dated July 20, 2000, the Retirement Systems notified Decedent that the beneficiary form could not be accepted because Decedent’s signature on the beneficiary form was not notarized. The Decedent did not submit another beneficiary form. Therefore, the Retirement Systems retained the beneficiary designations made on Decedent’s initial 1991 Enrollment Form already on file.
2. SCRS did not receive any further beneficiary designations from Decedent until March 12, 2009, when SCRS received a disability retirement application and related documentation from Decedent. In late 2008, the Decedent was diagnosed with cancer and in early 2009 began to make certain decisions regarding her retirement benefits. The March 12, 2009 submission included an SCRS Disability Retirement Application signed by the Decedent and witnessed by Decedent’s mother on February 25, 2009; an Authorization for Release of Information signed by Decedent on February 6, 2009 and witnessed by Marthalene R. Richardson, the Decedent’s aunt; a Member’s Disability Report signed by Decedent on February 25, 2009; an Employer’s Disability Employment Status Report completed by Cynthia Horey, a benefits consultant with Decedent’s employer, on March 9, 2009; and an Employer’s Description of Disability Applicant’s Job completed by Robert Bohnstengel, the principal of Decedent’s employing school, on February 13, 2009. All of the documents in this submission were related to the Decedent’s retirement due to disability and would become effective only at the time of her retirement. The documents were completed while the Decedent was hospitalized and her mother, aunt and the Petitioner assisted by picking up forms from the Decedent’s employer and returning the forms after they were completed. Regrettably, the Decedent passed away on April 1, 2009, prior to approval of the application for disability retirement, and the beneficiary designations made on the application never became effective. However, in the beneficiary designations section of the application, the Decedent designated her husband, Delbert Washington (the above named Respondent), and Petitioner, Crystal D. Richardson, as the beneficiaries for the return of any remaining contributions payable upon her death after retirement.
3. During the March 2009 time period, SCRS also received an Active Member Beneficiary Form which designated Washington, as the sole primary beneficiary for the Decedent’s active member death benefits and group life insurance benefits, Petitioner was designated as the contingent beneficiary for the Decedent’s death benefits. The Decedent’s signature on the Active Member Beneficiary Form was placed in the blank for the “WITNESS” rather than the blank for the “MEMBER’S SIGNATURE. According to Ms. Horey, she received a telephone request for the Active Member Beneficiary Form which she mailed to a private residence. The completed form was returned to Ms. Horey by mail. She then notarized the form and forwarded it to the Retirement System and the State Budget and Control Board, Employees Insurance Program for processing. Ms. Horey has never met the Decedent and did not see the Decedent sign the form.
4. On April 7, 2009, SCRS mailed the Decedent a Rejection Notice of Beneficiary Designation (Form 1102). Two items were checked on the rejection form. The first checked item states: “This form appears altered, and is, therefore, unacceptable. Please complete a new form if changes are required.” The next checked item states: “Other: Member’s signature can not [sic] be on the Witness Line.”
5. After Decedent’s passing on April 1, 2009, SCRS notified Decedent’s mother, Carolyn Richardson-Mikell, and the Petitioner by letters dated April 2, 2009 that they had been designated beneficiaries for Decedent’s active member death benefits under the System. The active member death benefits consisted of a refund of $9,745.63 in contributions and interest in Decedent’s SCRS account and a $20,493.56 SCRS group life insurance benefit equal to one year’s salary. In May 2009, after further review of the recently submitted Active Member Beneficiary Form, the Retirement Systems determined that although Decedent had signed the form in the wrong blank, the form clearly indicated that Decedent intended to designate her husband as the beneficiary for her active member death benefits. Respondent Washington was then notified that the active member death benefits would be paid to him, and the benefits were subsequently processed and paid to Washington.
6. By letters dated June 1, 2009, the Decedent’s mother and Petitioner were notified that SCRS no longer considered them beneficiaries due to the change in beneficiary form submitted on or around February 24, 2009. The notice letters also instructed Mrs. Richardson-Mikell and the Petitioner that if either disagreed with the determination, a formal written appeal could be filed with the SCRS Director, Peggy G. Boykin. The Petitioner filed her formal written appeal on July 13, 2009 citing several problems with the February 24, 2009 Change in Beneficiary Form and alleging the form was fraudulent. Problems cited by the Petitioner include the document not being signed in the presence of a notary, the Decedent’s signature not being on the correct line, and the birth date being listed incorrectly. On September 28, 2009, SCRS issued a Final Agency Determination with a finding that SCRS properly accepted and paid benefits according to the beneficiary designations made on the February 24, 2009 Active Member Beneficiary Form. SCRS found that:
With regard to the reliability of the beneficiary form itself, although there are certain irregularities on Decedent’s February 24, 2009 Active Member Beneficiary Form, Decedent’s signature on the form is notarized by a neutral third party, an employee in the human resources department with Decedent’s employer, and the form was retained in Decedent’s file with her employer. Further, the form is consistent with other retirement documents that Decedent executed during the same time period that were also submitted to the Retirement Systems by Decedent’s employer.
7. On October 20, 2009, Petitioner filed a timely Request for a Contested Case Hearing with this Court.
CONCLUSIONS OF LAW
Based upon the foregoing Findings of Fact, I conclude the following as a matter of law:
1. S.C. Code Ann. § 1-23-600 (Supp. 2009) grants jurisdiction to this Court to hear contested cases under the South Carolina Administrative Procedures Act. The Court has subject matter jurisdiction over this action pursuant to S.C. Code Ann. § 9-21-60 (Supp. 2009) which provides that a claimant may seek review of a final decision from the SCRS by requesting a contested case hearing. The review must be de novo in accordance with the Court’s rules and procedures.
2. The burden of proof is on the party seeking the affirmative in an adjudicatory administrative proceeding. 2 Am. Jur. 2d Administrative Law § 354 (2004). In the instant case, it is the claimant who has requested the contested hearing to challenge the Retirement Systems’ acceptance of the February 24, 2009 Active Member Beneficiary Form and subsequent payment of the Decedent’s active member death benefits to Delbert S. Washington; therefore the claimant must carry the burden of proving that the Retirement Systems’ decision should not be upheld.
3. As the trier of fact, the ALC must weigh and pass upon the credibility of the evidence presented. See South Carolina Cable Television Ass‘n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992).
4. In the case before the Court, the Decedent was a member of the Retirement Systems at the time of her death on April 1, 2009, and the parties concede that the Decedent died prior to approval of her application for disability retirement. The Decedent filed a total of three beneficiary designations with the Retirement Systems that would apply to the payment of her active member death benefits: (1) the initial designation made upon Decedent’s enrollment in October 1991; (2) the designation made when the Decedent re-enrolled on July 14, 2000; and (3) the designation made in the Beneficiary Designation Form notarized by Cynthia Horey on February 24, 2009. Decedent designated the Petitioner and her mother as joint beneficiaries in the 1991 form, the Petitioner as sole beneficiary in the 2000 form, and Delbert Washington as sole beneficiary in the 2009 form. SCRS rejected the 2000 designation because the Decedent’s signature on the beneficiary form was not notarized, therefore the designation made in the 2000 form is not an issue in this proceeding.
5. The Petitioner contends that the 2009 Designation of Beneficiary Form was not properly acknowledged because the notary was not present when the Decedent signed the form. The Court agrees.
6. The relevant portion of S.C. Code Ann. § 9-1-1650 provides that: “If a member dies before retirement, the amount of the member’s accumulated contributions must be paid to the member’s estate or to the person the member nominated by written designation, duly acknowledged and filed with the board.” (emphasis added).
7. Under the Uniform Recognition of Acknowledgements Act, a person performing “notarial acts” must certify that the affiant appeared before him and acknowledged executing the instrument. The person taking the acknowledgement must also certify that he either knew the affiant or had satisfactory evidence to verify the affiant’s identity. South Carolina Code Section 26-3-60 provides in pertinent part:
The words “acknowledged before me” mean:
(1) That the person acknowledging appeared before the person taking the acknowledgement;
(2) That he acknowledged he executed the instrument;
(3) That in case of:
(a) A natural person, he executed the instrument for the purposes therein stated;
(b) A corporation, the officer or agent acknowledged he held the position or title set forth in the instrument and certificate, he signed the instrument on behalf of the corporation by proper authority, and the instrument was the act of the corporation for the purpose therein stated;
(c) A partnership, the partner or agent acknowledged he signed the instrument on behalf of the partnership by proper authority and he executed the instrument as the act of the partnership for the purposes therein stated;
(d) A person acknowledging as principal by an attorney in fact, he executed the instrument by proper authority as the act of the principal for the purposes therein stated;
(e) A person acknowledging as a public officer, trustee, administrator, guardian or other representative, he signed the instrument by proper authority and he executed the instrument in the capacity and for the purposes therein stated; and
(4) That the person taking the acknowledgment either knew or had satisfactory evidence that the person acknowledging was the person named in the instrument or certificate.
8. Cynthia Horey, a benefits consultant with Decedent’s employer, testified that when she notarized the Active Member Beneficiary Form on February 24, 2009, the Decedent was not in her presence. In fact, Ms. Horey had never met the Decedent and did not know that it was actually the Decedent who signed the instrument as opposed to some other party. Therefore, the written beneficiary designation was not duly acknowledged as required by Section 9-1-1650.
9. SCRS argues that it was entitled to rely upon the acknowledgement of the February 24, 2009 Active Member Beneficiary Form as proof of Decedent’s proper execution of the form and the beneficiary designations contained therein. To support its argument, SCRS cites cases from several jurisdictions where it is generally established that a certificate of acknowledgement signed by a duly authorized officer raises a presumption that the execution of the instrument was valid and that the presumption of validity may only be overcome by clear and convincing evidence. See Huskins v. First Fed. Sav. & Loan Ass’n, 394 P.2d 729, 735 (Okla. 1964); McMurray v. Crawford, 594 P.2d 1109, 1115 (Kan. Ct. App. 1979); Mitschelen v. State Farm Mut. Auto. Ins. Co., 555 P.2d 707, 713 (N.M. Ct. App. 1976); Hulbert v. Givens, 392 P.2d 729, 735 (Okla. 1964). While an acknowledgement before a duly authorized officer is generally sufficient to permit a third party to rely upon the authenticity of the execution of an instrument, the proceeding before the Court in this matter was in the nature of a de novo hearing. A de novo hearing is a new hearing of a matter. See Black’s Law Dictionary, 725 (7th ed. 1999). Therefore, the Court is making an independent factual determination regarding the validity of the February 24, 2009 Active Member Beneficiary Form.
10. In light of the foregoing, the Court finds that the February 24, 2009 Active Member Beneficiary Form does not meet the statutory requirements for a beneficiary designation under the SCRS. The only valid beneficiary designation on file with the Retirement Systems is the October 1991 form which designates Crystal Richardson and Carolyn Richardson-Mikell as the beneficiaries of the Decedent’s active member benefits.
ORDER
IT IS HEREBY ORDERED that the Final Agency Determination of the South Carolina Budget and Control Board, South Carolina Retirement Systems dated September 28, 2009 is REVERSED, and the Decedent’s active member death benefits and group life insurance benefits shall be paid jointly to Crystal Richardson and Carolyn Richardson-Mikell, the beneficiaries designated by the Decedent in October 1991.
IT IS FURTHER ORDERED that the Active Member Beneficiary Form notarized on February 24, 2009 is invalid, and Delbert S. Washington is not entitled to payment of the Decedent’s active member death benefits and group life insurance benefits.
AND IT IS SO ORDERED.
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Shirley C. Robinson
Administrative Law Judge
May 27, 2010
Columbia, South Carolina
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