1. 1 DISABILITY RETIREMENT WHAT’S THE EFFECTIVE DATE ? " REVISITED "

2. 2 THE PANEL Alan Blakeboro, Esq., Alan Blakeboro, Esq., Board Counsel, SBCERS Jim Castranova, Esq., Jim Castranova, Esq., Sr. Staff Counsel, LACERA Phyllis Gallagher, Esq., Phyllis Gallagher, Esq., Deputy C.C., Sonoma David Lantzer, Esq., David Lantzer, Esq., Staff Attorney, OCERS

3. 3 WHY THIS TOPIC ? CONFUSION about statutory language INCONSISTENCY among the 37 Act systems in interpreting §31724 and in implementing procedures. IMPACT ON STAKEHOLDERS: Applicant: benefit amount, FAS, retroactive sums System: obligation to avoid misuse of funds Plan Sponsor: faces the potential for over payments Tax Payers: moral dilemma of double dipping

4. 4 WHY REVISIT THIS TOPIC? Since our session in 2006, the courts provided judicial clarification of the provisions of § 31724. KATOSH v. SCERA (published - Court of Appeal) PORTER I, II v. OCERS (unpublished - Court of Appeal) WEILAND v. SBCERS (trial court)

5. 5 CASE CITES Katosh v. SCERA 163 Cal.App.4 th 56 (2008) Porter v. OCERS (Porter I) (12/23/05, G034319) [2005 Cal.App.Unpub. LEXIS 11827] Porter v. OCERS (Porter II) (12/18/08, G038450) [2008 Cal.App.Unpub. LEXIS 4930] Weiland v. SBCERS (trial court) Santa Barbara Superior Court Case No. 1185956

6. 6 SESSION AGENDA We will …. Explain the confusion related to the provisions of § 31724. Analyze the recent judicial decisions. Discuss how to implement procedures consistent with recent court decisions.

7. 7 PART 1 SOURCES OF CONFUSION

8. 8 SOURCE OF CONFUSION #1 Multiple Dates Jim Castranova

9. 9 First, let’s look at the confusing controlling statute…

10. 10 § 31724 The plain language tells us when the benefit begins…

11. 11 G. C. §31724 If the proof received, including any medical examination, shows to the satisfaction of the board that the member is permanently incapacitated physically or mentally for the performance of his duties in the service, it shall retire him effective on the expiration date of any leave of absence with compensation to which he shall become entitled under the provisions of Division 4 (commencing with Section 3201) of the Labor Code or effective on the occasion of the member's consent to retirement prior to the expiration of such leave of absence with compensation. His disability retirement allowance shall be effective as of the date such application is filed with the board, but not earlier than the day following the last day for which he received regular compensation. Notwithstanding any other provision of this article, the retirement of a member who has been granted or is entitled to sick leave shall not become effective until the expiration of such sick leave with compensation unless the member consents to his retirement at an earlier date. When it has been demonstrated to the satisfaction of the board that the filing of the member's application was delayed by administrative oversight or by inability to ascertain the permanency of the member's incapacity until after the date following the day for which the member last received regular compensation, such date will be deemed to be the date the application was filed.

12. 12 t provides many possible effective dates …. §31724 (paraphrased) It provides many possible effective dates …. §31724 (paraphrased) If the member is permanently incapacitated, he shall be retired as of : 1. Application date or “deemed” application date 1. Not earlier than the day after the last day of regular compensation 1. On the expiration of leave of absence with compensation under Div. 4 of the Labor Code, or 2. Prior to the expiration of Div. 4 leave, if he agrees 1. On the expiration of sick leave with compensation, or 2. Prior to the expiration of sick leave, if he consents.

13. 13 Source of Confusion #1: Multiple Dates Source of Confusion #1: Multiple Dates (Jane Doe, Applicant) TIMELINE OF EVENTS 1/1/00 1/2/02 9/3/03 3/4/04 3/1/06 4/1/06 Last day Ascertains App. Sick Pay TTD SCD at work permanency date ends ends granted (Work Comp Div.4) WHAT’S THE EFFECTIVE DATE??? WHAT’S THE EFFECTIVE DATE???

14. 14 How do we coordinate all the possible effective dates… is there a model to follow???….. Hopefully, this session will provide some answers.

15. 15 SOURCE OF CONFUSION # 2 What is REGULAR COMPENSATION? Phyllis Gallagher

16. 16 SOURCE OF CONFUSION # 2: What is Regular Compensation??? Is it pay for actually doing work ? Is it full or partial pay ? Is it consecutive pay ? Is it usual pay ? Does it include sick or vacation pay ?

17. 17 In the past, the systems disagreed on the “the last day of regular compensation”… LACERA “last day of work” (butt in the chair theory) OCERS and SCERA “the last day any salary (i.e. wages for sick leave, vacation, annual leave, holiday) is received after leaving work” SBCERS “the last day of work, with the effective date of benefits extended by pay received after leaving work compressed into consecutive, full pay periods.”

18. 18 RECENTLY The Court of Appeal defined “Regular Compensation” KATOSH v. SCERA This decision greatly impacts the way systems are now looking at this issue. (I will discuss the details later!)

19. 19 SOURCE OF CONFUSION # 3 The “Deemed” Application Date David Lantzer Actual file date Deemed file date

20. 20 SOURCE OF CONFUSION # 3: The “Deemed” Application Date SOURCE OF CONFUSION # 3: The “Deemed” Application Date § 31724 provides an exception that allows a member’s application date to be moved to a “deemed” application date under certain circumstances. This may result in “an early effective date” of benefits that precedes the actual date of application.

21. 21 The “Deemed” Application Date Exception… The date of application may be moved to the day after the last day of regular compensation, if the Applicant was delayed in filing his application by: Administrative oversight, or Inability to ascertain whether the incapacity was permanent Deemed Application Date Actual Application Date

22. 22 When should the application date be moved to an earlier “deemed” date? § 31724 does not give us the details: What is “administrative oversight”? How is permanency ascertained? Ascertained by whom? Is a member required to file promptly after learning of permanency?

23. 23 RECENTLY, The Court of Appeal, in an unpublished opinion, clarified one of these questions. Mary Porter v. OCERS (Porter I) (I will discuss this court decision in Part II.)

24. 24 SOURCE OF CONFUSION # 4 Leave w/ compensation under Labor Code (Division 4) Alan Blakeboro

25. 25 SOURCE OF CONFUSION # 4: Labor Code Division 4 Benefits All benefits or selected benefits? § 31724:..benefit is effective on the expiration of the member’s leave of absence with compensation under Div. 4 of the Labor Code…(Workers’ Compensation pay) Is this limited to 4850 pay?( full pay-safety ) Does it include Total Temporary Disability (TTD) payments ?

26. 26 RECENT COURT THINKING  The Court of Appeal, in an unpublished decision, mentioned the issue of TTD benefits. Mary Porter v. OCERS (Porter II) (David will explain this reference)  A trial court ruled on the issue of TTD benefits Weiland v. SBCERS (I will explain this ruling)

27. 27 Source of Concern # 5 “DOUBLE DIPPING” Early effective dates potentially allow members to concurrently receive: RETIREMENT PAYMENTS SICK LEAVE PAY HOLIDAY PAY VACATION PAY WORKERS’ COMP MISC. PAYMENTS

28. 28 DOUBLE DIPPING QUESTIONS Is the member entitled to double payments? Should applicant return prior pay to the employer? Should Retirement take a credit for prior payments? Should the employer try to recover the prior payments? Is double dipping “none of our business”?

29. 29 RECENT COURT RULING Santa Barbara County Superior Court recently addressed the “Double Dipping” issue in: Weiland v. SBCERS (details to be explained in Part II)

30. 30 REVIEW Sources of Confusion Is there a model for managing all the potential effective dates? What is “regular compensation”? Is “Leave of absence w/ compensation under Div. 4 of the Labor Code” limited to 4850 benefits, or does it include TTD? How does an applicant qualify for an early “deemed application date”? Is “double dipping” from different benefit systems for the same period permissible or unacceptable?

31. 31 Part II ANALYZING THE CASE LAW

32. 32 Each of the following recent court decisions provides some part of the puzzle to clarify the issues we just outlined!

33. 33 PORTER (I and II) v. OCERS ( unpublished ) Here to discuss this case is: DAVID LANTZER, ESQ. STAFF ATTORNEY ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM

34. 34 MARY PORTER v. OCERS (Porter I) CASE FACTS _________________________________________________________________________________ 2/14/00 June/July 00 3/5/01 Last day at learned disability was filed application Work permanent Porter waited 9 months after ascertaining the permanency of her disability to file an application for disability retirement The trial court determined that Porter was not entitled to an early effective date, because she unreasonably delayed her application after ascertaining permanency, but… The Court of Appeal reversed.

35. 35 Porter v. OCERS (Porter 1) CA Addressed the “Deemed” File Date ISSUE: Can an applicant continue to delay in filing an application after ascertaining the permanency of their disability, and still qualify to have their application deemed filed on the day after the last day of regular compensation? Or, put another way… In order to get an early “deemed” file date, is an applicant obligated to file within a reasonable time after ascertaining the permanency of their disability?

36. 36 PORTER I: “DEEMED” FILE DATE Court Of Appeal Holding: 31724 states that if an application for disability retirement is delayed by inability to determine the permanency of the incapacity, the application will be deemed filed on day after the last day of regular compensation. “ Nothing in the language [of §31724] imposes any additional time mandates for filing once the initial requirement is met.”

37. 37 PORTER 1 COURT OF APPEAL REASONING Regarding § 31724: “…our responsibility is to determine its meaning from the words set out, not to insert language.”

38. 38 CLARIFICATION OF: “Deemed File Dates” Porter I court found : There is no statute of limitations for filing a disability retirement application when the member cannot ascertain the permanence of the incapacity; Therefore, a member can file an application at any time after permanence is established and have the deemed filed date set at the day after receipt of regular compensation.

39. 39 Porter 1 Also Addressed“Regular Compensation” THE PARTIES’ POSITIONS: OCERS position: Last day at work is not the last day of regular compensation. Porter position: Concedes that the two days are not necessarily the same.

40. 40 PORTER 1 Conclusion on “Regular Compensation” Porter 1 Dicta: The regular compensation argument is irrelevant, The statute language on Labor Code benefits and sick leave does not define regular compensation, but places potential limitations on when payments may begin.

41. 41 CLARIFICATION OF: “Regular Compensation” The PORTER I court gave us no clear indication of what “regular compensation” is, but it did provide some indication of what regular compensation is not.

42. 42 PORTER 1 ALSO ADDRESSED TTD Porter acknowledged that if she agreed to an effective date earlier than the expiration of her Labor Code benefits or her sick leave, she might be required to repay TTD payments or sick leave or both “to avoid double dipping”. The court remanded the matter back to the trial court to determine whether Porter must reimburse any payments made to her for leave of absence or sick leave or both.

43. 43 CLARIFICATION OF: Labor Code Benefits Porter 1 Court acknowledged that a member who is awarded an early effective date may have to pay back all benefits paid to him under Division 4 of the Labor Code, including TTD. Porter herself acknowledged that an early effective date creates a double dipping scenario which should be avoided.

44. 44 PORTER II Procedural Events On remand to the trial court, the court found: Compensation under Div. 4 “means and includes every benefit …conferred by Division Four… Porter is not entitled to disability retirement benefits until after her Workers’ Compensation benefits end. The matter is remanded to the OCERS Board to determine the amount of Work Comp received and Porter’s ability to re-pay benefits so as to entitle her to an early effective date, but before the OCERS Board could address this…. PORTER FILED AN APPEAL.

45. 45 CLARIFICATION OF: Expiration of Labor Code Benefits Porter II trial court held that 31724 language delaying retirement benefits until the expiration of Labor Code Div. 4 benefits includes the expiration of all such benefits, including TTD. (Superior Court decision - not controlling)

46. 46 Porter II – Court of Appeal Porter argued “leave of absence with compensation” under 31724 is limited to 4850 benefits for safety members and does not apply to her as she was a general member (bus driver). OCERS argued that 31724 prohibits Porter from getting workers’ compensation TTD benefits and disability retirement simultaneously, and Porter’s appeal is premature because she did not exhaust her administrative remedies.

47. 47 Problems with Porter’s position:  It is contrary to the plain language of the statute  It is contrary to the purpose of the amendments to the statute as set forth in the legislative intent (i.e. depriving members of full workers’ comp. benefits)  It allows a member to receive concurrent payments from the county (i.e. double dip)  It is inconsistent with PERL and STRL (Gov. Code § 21165, Ed. Code § 24109)

48. 48 Porter II Court of Appeal Action The Court of Appeal agreed with OCERS and dismissed the appeal, as premature. The court invited the parties to stipulate to the amount and duration of TTD payments so the court could resolve the issue. Porter’s counsel insisted on additional material not relevant to the court’s request so the parties did not arrive at a stipulation.

49. 49 The Bottom Line OCERS’s Position TTD is salary replacement for active employees hurt on the job Active employees do not receive retirement benefits Once a member retires, they are no longer eligible for TTD There cannot be overlap of the two!

50. 50 KATOSH V. SCERA HERE TO DISCUSS THIS CASE IS PHYLLIS GALLAGHER, ESQ. DEPUTY COUNTY COUNSEL SONOMA COUNTY

51. 51 KATOSH v. SCERA FACTS 6/27/00 Last day worked * Also LWOP 2/6/02 Date of application 11/26/02 – 12/9/02 On payroll, used sick leave* 10/12/04- 11/8/04 On payroll, used vacation and sick leave*

52. 52 SCERA’S POSITION 6/27/00 Last Day Worked 2/6/02 Date of application 11/26/02 – 12/9/02 On payroll, used sick leave* 10/12/04-11/8/04 On payroll, used vacation and sick leave* County Retirement Retirement Effective Date is 10/28/04* because that is the day after the last day for which the member received regular compensation from the County. *Up until 10/27, member earned compensation through either vacation leave or sick leave. From 10/28/04 until end of pay period (11/8/04), leave was taken without pay, so last day of compensation was 10/27/04.

53. 53 SCERA’S POSITION AND 31724: Presumptive Effective Date is Date of Application – 31724: “His disability retirement allowance shall be effective as of the date of such application.” Exception: Effective Date Cannot Be Earlier Than The Day After The Last Day of Regular Compensation – 31724: “but not earlier than the day following the last day for which he received regular compensation.” Because the application date was earlier, SCERA set the effective date as the day following the day for which she last received compensation (vacation/sick leave). The “earlier effective date” provisions are not applicable: 31724: “When it has been demonstrated to the satisfaction of the Board that the filing of the member’s application was delayed … until after the date following the day for which the member last received regular compensation….”

54. 54 KATOSH’S POSITION: “BUTT IN CHAIR” THEORY 2002 and 2004 paydays were not days for which she received “regular compensation” because regular compensation means “compensation received for actually showing up at work”. Looking at timeline, this definition of regular compensation would allow her to make a case for an “earlier” effective date on the basis of an inability to ascertain the permanency of her incapacity.

55. 55 COURT’S HOLDING SCERA GOT IT RIGHT COURT’S HOLDING SCERA GOT IT RIGHT! “Regular compensation” is compensation received when taking annual leave, sick leave, or vacation leave as time off during the period of employment.

56. 56 IMPORTANT PARTS OF COURT’S DECISION IN KATOSH v. SCERA The definition of regular compensation. Regular compensation includes compensation for sick leave, vacation leave, annual leave, when taken as time-off (as distinguished from “cash-out” upon separation). *** “The interpretation of the statute should not vary by the particular circumstances of the disability retirement applicant.” The intent of “no earlier than the day after the last day of regular compensation” is to prevent double-dipping, and the statute should be construed to effectuate that purpose. Member understanding consequences of taking compensation after date of application helps, but is not necessarily determinative of whether that compensation will be interpreted as regular compensation under 31724.

57. 57 POST-KATOSH – SIMPLIFY! The law supports an approach to effective dates that is relatively easy to administer: The only two dates that matter are the date of application and the date of last regular compensation. The later of the two dates will be the effective date unless the member asks for an “earlier effective date.” If the later of the two is the date of application, allow the member to show that her application was delayed either by administrative oversight or by an inability to ascertain the permanency of her incapacity.

58. 58 BENEFITS OF SCERA’S APPROACH  Easy to administer.  System is not in position of judging the fairness of each application of the statute. Remember what the court said in Katosh: “the interpretation of a statute should not vary by the particular circumstance of the disability retirement applicant.”  System is not in position of applying offsets to avoid double-dipping, which it arguably does not have authority to do.  Members will have a clear expectation of the effect of taking sick leave, vacation leave or annual leave after the date of application

59. 59 KATOSH SUMMARY Regular compensation includes compensation for sick leave, vacation leave, annual leave, when taken as time-off regardless of the amount of such compensation or whether it is received consecutively.

60. 60 WEILAND V. SBCERS HERE TO DISCUSS THIS CASE IS ALAN BLAKEBORO, ESQ. BOARD COUNSEL SANTA BARBARA COUNTY EMPLOYEES RETIREMENT SYSTEM

61. 61 WEILAND v. SBCERS Summary of Facts 1/20/95 Weiland’s last day at work 8/26/02 Date of Application 6/4/03 Board granted NSCD; SCD, effect. date to referee 3/17/04 Board adopt referee’s recommendation to grant SCD, but not effective date; sets Board hearing 7/13/05 Board finds effective date is 8/26/02 10/11/05 Weiland files Petition-Writ of Mandate (Faunce) Petition seek determination as to whether effective should be earlier than application date due to Weiland’s inability to ascertain the permanency of her incapacity.

62. 62 ISSUES PRESENTED IN LITIGATION 1. Was the Board correct in finding the last day of regular compensation to be the last day of work? 2. Did the Board err in looking at the entire period of delay(1/95 – 8/02) in determining that Weiland delayed unreasonably after ascertaining permanency? 3. Is the Board’s policy of compressing all pay received after leaving work into consecutive, full pay periods in compliance with the law? 4. Should the start of retirement benefits be delayed until the expiration of Weiland’s Work Comp TTD benefits?

63. 63 TRIAL COURT’S RULING ISSUE 1: Regular Compensation The Board did not err in finding the last day of work was the last day of regular compensation (decided before Katosh) On motion for new trial after Katosh, the court said regarding the Board’s “compression” policy: Katosh does not compel the conclusion that the Board’s “compression” policy is in error, The Board’s application of the law prevents double dipping The Board’s “compression” policy may not be the only policy consistent with the law

64. 64 ISSUE 1: Regular Compensation Weiland – Katosh Differences 1. Weiland received small amounts of sick pay and other compensation over 7 years. 2. Weiland was not warned that accepting pay after leaving work may impact retirement benefits. 3. Weiland did not seek retirement and compensation for the same period. (SBCERS policy is to delay benefits until the end of compressed compensation.)

65. 65 TRIAL COURT’S RULING Issue 2: Further Delay in Filing Only in extraordinary circumstances should the Board look at further delay after a member ascertains permanency. Usually, if a member is uncertain of her incapacity on the last day of work, there is no requirement to file immediately and further delay will not affect entitlement to an early effective date. (adopted Porter I.)

66. 66 TRIAL COURT’S CONCLUSION ISSUE 3: COMPRESSION Board’s policy of compressing pay received after leaving work, and then starting retirement benefits is consistent with the law. Board’s policy addresses receipt of small amounts of sick pay over a long period The policy avoids receipt of pay and retirement for same period (which Katosh sought)

67. 67 ISSUE # 4 Should an effective date be delayed until TTD payments end? Arguments in favor: The plain language of 31724 prevents concurrent receipt of TTD and retirement  May be consistent w/ some Leg. History  Concurrent receipt of disability retirement and TTD is inconsistent with PERL (G.C.21165 and SRL (Ed. Code. 24109)

68. 68 ISSUE 4: Arguments against delaying till end of TTD Plain language supports limit to 4850 benefits: “compensation” and contributions are deducted Leg. history: intent to preserve 4850, not to postpone benefits until TTD ends No evidence of intent to reverse cases allowing receipt of TTD and retirement at same time” Pennington v. WCAB (1971) 20 Cal.App. 3d 55 Burns v. WCAB (1987) 190 Cal.App. 3d 759(VRTD) Re the above cases: “Neither consistency nor logic is a hallmark of the compensation statutes.” Ritchie v. WCAB (1994)24 Cal.App. 4 th 1174, 1189

69. 69 FURTHER DEVELOPMENTS 10/21/08 Santa Barbara County filed a Motion to Vacate the Judgment and Enter a New Motion, and a Request for Stay of Enforcement. County argued benefit starts at end of TTD The Court granted the Stay.

70. 70 RESULTS OF HEARING ON MOTION TO VACATE THE JUDGMENT The Judgment was vacated. Superior Court Ruling: Petitioner's disability retirement may not be paid retroactively to the period during which she received temporary disability payments, unless she elects an offset.

71. 71 COURT’S REASONING TTD is not included in the definition of regular compensation. The Work Comp and Sick Leave provisions are limitations on when disability benefits may begin. The legislature intended to prohibit double dipping. Weiland is not entitled to both TD/sick leave and disability retirement.

72. 72 PART 3 PROCEDURES FOR IMPLEMENTING THE PROVISIONS OF §31724

73. 73 EFFECTIVE DATE MODELS Here to discuss the models used by various systems for identifying the effective date of benefit is: JIM CASTRANOVA, ESQ. SENIOR STAFF COUNSEL LOS ANGELES COUNTY EMPLOYEES RETIRMENT ASSOCIATION

74. 74 1/1/00 1/2/02 9/3/03 3/4/04 3/1/06 4/1/06 Last day Ascertains App. Sick Pay TTD SCD at work permanency date ends ends granted OCERS’ MODEL 1.Determine the application date. 2.If member received regular compensation (sick/annual leave) after the application date, day after last receipt is the potential effective date. 3.If TTD is also received after 1 st potential date, move effective date to day after TTD ends. Disability investigators/attorneys should request TTD benefit statements in order to complete the record

75. 75 1/1/00 1/2/02 9/3/03 3/4/04 3/1/06 4/1/06 Last day Ascertains App. Sick Pay TTD SCD at work permanency date ends ends granted SBCERS’ MODEL (currently) 1.Identify last day at work. 2.Compress all compensation (not TTD) received after last day at work into full, consecutive pay periods. 3.Effective date is day after compression ends. (SBCERS is considering revising this procedure.)

76. 76 1/1/00 1/2/02 9/3/03 1/2/04 3/4/04 3/1/06 4/1/06 last day Ascertains App. 6.20.070 Sick Pay TTD SCD at work permanency date ends ends ends granted LACERA’s MODEL 1.Identify last day at work. (This is last day of regular comp) 2.Find last day of 6.20.070 Work Comp pay (special work comp benefit per County ordinance). Day after special work comp benefit ends is the 1 st potential effective date. 3.Determine member’s current unused sick leave balances. 4.Beginning at day after last 6.20.070 W.C. pay, determine end date of unused sick leave hours if used 8hrs/day till balances run out. 5.Effective date: member may chose any date from the day after 6.20.070 pay ends to the date unused sick leave would end, if used at rate of 8 hrs per day.

77. 77 1/1/00 1/2/02 9/3/03 3/4/04 3/1/06 4/1/06 Last day Ascertains App. Sick Pay TTD SCD at work permanency date ends ends granted SCERA’ MODEL 1.Identify date of application. 2.Find the date on which all compensation (sick, annual leave, vacation) paid after the application date ends. SCERA does not consider TTD to be regular compensation or leave of absence with pay under Div. 4 of the Labor Code, as those terms are used in 31724. SCERA considers TTD to have no effect on effective date of benefit. 3.The effective date is day after all regular compensation received after the application date ends. 4. If there is no compensation paid after the date of application, the member may qualify for an early effective date (“deemed application date) dating back to the day after the last day of regular compensation.

78. 78 DISCUSSION We want to hear from you!! Questions???? Comments???