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PENNSYLVANIA ASSOCIATION STATE MENTAL HOSPITAL PHYSICIANS v. STATE EMPLOYEES' RETIREMENT BOARD (03/14/79)

SUPREME COURT OF PENNSYLVANIA


decided: March 14, 1979.

PENNSYLVANIA ASSOCIATION OF STATE MENTAL HOSPITAL PHYSICIANS, INC., AND RUTH C. SABATINO, AN INDIVIDUAL, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, AND MARY L. HANSEN, M. D., AN INDIVIDUAL, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, AND A. VICTOR HANSEN, M. D., AN INDIVIDUAL, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, AND F. LEWIS BARTLETT, M. D., AN INDIVIDUAL, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED
v.
STATE EMPLOYEES' RETIREMENT BOARD, AND SOL. E. ZUBROW, IN HIS CAPACITY AS CHAIRMAN OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND HONORABLE C. DELORES TUCKER, IN HER DUAL CAPACITY AS SECRETARY OF THE COMMONWEALTH AND AS VICE-CHAIRMAN OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND FRANK M. HAPP, IN HIS CAPACITY AS MEMBER OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND WILLIAM J. MORAN, IN HIS CAPACITY AS MEMBER OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND HONORABLE PAUL J. SMITH, IN HIS CAPACITY AS MEMBER OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND HONORABLE VINCENT YAKOWICZ, IN HIS CAPACITY AS MEMBER OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND RICHARD L. WITMER, IN HIS CAPACITY AS EXECUTIVE SECRETARY OF THE STATE EMPLOYEES' RETIREMENT BOARD, AND GRACE M. SLOAN, IN HER CAPACITY AS TREASURER OF THE COMMONWEALTH OF PENNSYLVANIA, AND HONORABLE MILTON J. SHAPP, IN HIS CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF PENNSYLVANIA, APPELLANTS

No. 604 January Term, 1977, Appeal from Order of the Commonwealth Court of Pennsylvania entered July 19, 1977 at No. 1741, C.D. 1975.

COUNSEL

Gerald Gornish, Acting Atty. Gen., Joseph Kenneth Hegedus, Deputy Atty. Gen., Norman J. Watkins, Deputy Atty. Gen., Chief, Civil Litigation, Harrisburg, for appellants.

Richard B. Sigmond, Philadelphia, for appellees.

Eagen, C. J., and O'Brien, Roberts, Pomeroy, Nix, Manderino and Larsen, JJ. Pomeroy, former J., did not participate in the decision of this case. Nix, J., filed a concurring and dissenting opinion. Larsen, J., dissents and believes the suit should be dismissed, as there are no issues which are presently existing which can be decided by the Court.

Author: Roberts

[ 484 Pa. Page 315]

OPINION OF THE COURT

"Credited service" is one of two variables in the basic formula for calculating retirement benefits under the State Employes' Retirement Code of 1959.*fn1 Under the Code of 1959, as amended, "credited service" also determines employees' eligibility for benefits.*fn2

Section 204(1) of the Code of 1959, which sets forth the method for computing "credited service," provides:

"In computing the length of service of a contributor for retirement purposes, a year of service shall mean a period of twelve (12) months during which a contributor is a State employe and for which he receives an annual salary or other compensation. The time during which a State employe is on furlough or on leave of absence without pay shall not be counted in computing the credited service or the final average salary of the contributor . . . ."

[ 484 Pa. Page 316]

Until 1969, appellant State Employes' Retirement Board computed salaried part-time employees' "credited service" at a rate of one full year for every twelve months a salaried part-time employee received a salary. Beginning in 1969, the Board gave such employees less than a full year of credit for each twelve months a salary was received. The portion of credit granted reflected the percentage of a full-time schedule a salaried part-time employee worked.*fn3

Appellees instituted a class action in the Commonwealth Court on behalf of all part-time employees of the Commonwealth who are paid an annual salary.*fn4 Appellees sought a writ of mandamus directing the Board and other appellants to compute salaried part-time employees' "credited service" as it was computed until 1969. On appellees' motion for partial judgment on the pleadings, a unanimous Commonwealth Court concluded that the Board's present practice contravened Section 204(1) and granted the writ.*fn5 We affirm.*fn6

[ 484 Pa. Page 317]

The Board argues that the Commonwealth Court misinterpreted Section 204(1) of the Code of 1959. The Board reads Section 204(1) to require, in the computation of credited service, an adjustment based upon the portion of a full-time schedule the salaried part-time employee works. The plain language of Section 204(1) and other key provisions of the Code of 1959 require us to reject the Board's interpretation.

Under Section 204(1), to gain credit for "a year of service," a contributor must, for "a period of twelve (12) months," both be a "State employe" and receive "an annual salary or other compensation." There is no dispute that salaried part-time employees received annual salaries. Further, we conclude that salaried part-time employees were "State employes." Section 102(6)(a) of the Code of 1959, 71 P.S. § 1725-102(6)(a), defines a "State employe" as "[a]ny person holding a State office or position under the Commonwealth, employed on a yearly or monthly basis by the State government of the Commonwealth, in any capacity whatsoever except any officer or employe employed on a per diem or hourly basis for less than one hundred (100) days or seven hundred fifty (750) hours . . . ." This sweeping language demonstrates the Legislature's intent to make benefits available to all Commonwealth personnel except a narrow group of "per diem" and "hourly" employes who work

[ 484 Pa. Page 318]

"less than one hundred (100) days or seven hundred fifty (750) hours." Salaried part-time employees are employed on neither a "per diem or hourly basis" and thus, under Section 102(6)(a), are "State employes."

The fact that the Legislature, under Section 204(1), excluded from credited service "[t]he time during which a State employe is on furlough or on leave of absence without pay" does not support the Board's interpretation of the Code. The "furlough" and "leave of absence without pay" exceptions address circumstances where there is an interruption of the employment relationship. There is no interruption of employment in the case of a salaried part-time employee, who provides regular and continuous service over a twelve month period. We hold that these salaried part-time contributors are entitled to a full "year of service" credit under Section 204(1) for each twelve month period of employment.*fn7

Under the Board's challenged plan, the downward adjustment in part-time employees' "credited service" is compensated for, in part, by an "annualization" of actual salary. The "annualized" salary is the projected salary the part-time employee would receive had the part-time employee worked full-time.*fn8 The Board asserts that the "annualized

[ 484 Pa. Page 319]

    salary," when used with adjusted "credited service" in the basic benefits formula, effects no change in the amount of benefits most qualifying salaried part-time employees receive.*fn9 The Board also asserts that its reformulation avoids the disproportionate sums received by employees who begin as "part-time," but later become "full-time" employees. According to the Board, part-time employees who later become full-time employees will gain extra benefits for the years of part-time employment because of higher full-time salaries.*fn10

In view of the express formulation of benefits under the Code of 1959, it must be concluded that the Legislature did not preclude the result the Board envisions. Were we to authorize the Board's action, we would, in effect, impermissibly rewrite the Retirement Code. See 1 Pa.C.S.A.

[ 484 Pa. Page 320]

§ 1921(b) (Supp.1978) ("[w]hen the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit").*fn11

Order of the Commonwealth Court affirmed.

NIX, Justice, concurring and dissenting.

The majority seeks to insulate its analysis from critical scrutiny by maintaining that the result it reaches is dictated by the "clear and unambiguous" language of Section 204(1), of the Retirement Code (Code), 71 P.S. § 1725-204(1) (1962). The majority leaves unstated the fact that an ambiguity can be latent as well as patent.*fn* When it is considered that the

[ 484 Pa. Page 321]

State did not have a category of part-time salaried employees at the time of enactment of the 1959 Code, the weakness of the majority's primarily textual analysis of the Code becomes apparent.

The majority places considerable emphasis on the Code's definition of "State employee," contained in section 102(6)(a). 71 P.S. § 1825-102(6)(a) (1962) (repealed 1974). Based on this section's exclusion of per diem and hourly employees only, the majority concludes that the legislature intended to make retirement benefits available on equal terms to full-time as well as part-time salaried employees. As noted by appellants, the utilization of part-time salaried employees was a circumstance which arose after the enactment of the Code in 1959. In fact, the record indicates that none of the named appellees was a part-time salaried State employee prior to 1959. Far from evidencing the legislature's sweeping magnanimity, the absence of explicit statutory provisions governing retirement benefits for part-time salaried employees merely reflects the "historical milieu" in which the 1959 Legislature was acting. See 2A Sutherland, Statutes and Statutory Construction § 49.01, at 288 (4th ed. 1973) (historical context should be considered in construing a statute). When this contemporaneous historical context is weighed along with the Code's total exclusion of part-time employees who work less than a specified number of days or hours, 71 P.S. § 1725-102(6)(a) (1962) (repealed 1974), it is impossible to accept the majority's conclusion that the legislature intended to award credited service to part-time salaried employees at the same rate at which such credit is awarded to full-time salaried employees.

The fact that until 1969 the Board interpreted the Code in the manner now urged by appellees is of no moment. In so interpreting the Code, the Board was merely exercising its administrative discretion to meet an exigency not explicitly

[ 484 Pa. Page 322]

    addressed by the Code. It seems fairly clear that an administrative agency may modify or even reverse its own interpretation of a statute, especially where, as here, the new interpretation is based upon the opinion of the Attorney General. See Sutherland, supra § 49.05, at 240. In such a situation, the new administrative interpretation should be applied prospectively only. Id. Therefore, in the present appeal, I would not permit the Board to apply its 1969 reinterpretation retrospectively so as to recalculate credited service based upon appellees' pre-1969 salaried part-time employment. I would, however, allow the Board to apply its 1969 interpretation to appellee's part-time salaried employment occurring after the date of this interpretation and until the effective date of the 1974 Retirement Code. 71 Pa.C.S.A. §§ 5101 et seq. (Supp.1978-79).


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