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PENNSYLVANIA ASSOCIATION STATE MENTAL HOSPITAL PHYSICIANS ET AL. v. STATE EMPLOYEES' RETIREMENT BOARD ET AL. (08/10/84)

decided: August 10, 1984.

PENNSYLVANIA ASSOCIATION OF STATE MENTAL HOSPITAL PHYSICIANS ET AL., PETITIONERS
v.
STATE EMPLOYEES' RETIREMENT BOARD ET AL., RESPONDENTS



Original jurisdiction in the case of Pennsylvania Association of State Mental Hospital Physicians, et al. v. State Employees' Retirement Board, et al.

COUNSEL

Richard B. Sigmond, with him, Leonard Spear and Samuel L. Spear, Meranze, Katz, Spear & Wilderman, for plaintiffs.

Marsha V. Mills, Assistant Chief Counsel, for respondent, State Employees' Retirement Board.

John P. Krill, Deputy Chief Counsel, for respondent, Office of General Counsel.

Debra Wallet, Deputy Attorney General, with her, Allen C. Warshaw, Senior Deputy Attorney General, Litigation Section, and LeRoy S. Zimmerman, Attorney General, for respondent, Commonwealth of Pennsylvania.

Senior Judge Blatt. Memorandum Opinion by Judge Blatt.

Author: Blatt

[ 87 Pa. Commw. Page 109]

The Pennsylvania Association of State Mental Hospital Physicians (petitioners) seek here an order granting a Petition for Attorney's Fees in their suit against the State Employees' Retirement Board (Board).*fn1

The petition now before us arises out of a class action suit initiated by the petitioners in November, 1975 which challenged the Board's method of calculating "credited service" under Section 204(1) of the State Employes' Retirement Code of 1959*fn2 for all

[ 87 Pa. Commw. Page 110]

    part-time employees of the Commonwealth of Pennsylvania who earned annual salaries prior to March 1, 1974.*fn3 The amount of "credited service" which such a state employee is deemed to have completed determines his eligibility for vesting*fn4 along with the amount of benefits*fn5 he receives at retirement age.

Until mid-1969, the Board calculated the petitioners' "credited service" at the rate of one full year for each twelve-month period in which the petitioners received an annual salary. Thus, the fact that petitioners may have worked part-time did not enter into the Board's computation of "credited service". The Board then requested and received an opinion from the attorney general, in which they were advised that "credited service" must reflect the actual amount of time worked by an employee as a percentage of full-time employment. Our Supreme Court, however, held that the General Assembly, in establishing the method of computing "credited service", did not distinguish between part-time and full-time state employees who received an annual salary and that, therefore, the change instituted by the Board beginning in 1969 was improper. Pennsylvania Association of State Mental Hospital Physicians v. State Employees' Retirement Board, 484 Pa. 313, 399 A.2d 93 (1979).

[ 87 Pa. Commw. Page 111]

Subsequent to this Supreme Court ruling, the Board issued a directive which instructed Commonwealth personnel supervisors to compute "credited service" in compliance with this Court's order, and further ordered that the petitioners' "final average salary" be calculated in a new manner as set forth in the directive. The "final average salary"*fn6 is used, along with the amount of "credited service", to determine the amount of benefits an employee receives at retirement age. Believing that the instructions contained in the directive regarding the computation of "final average salary" would work to negate the final order of the Supreme Court, the petitioners began discovery proceedings. In the course of those proceedings, the parties entered into negotiations which resulted in the entering of a consent decree by this Court on March 7, 1984. We note that, in regard to attorney's fees, the consent decree provides that the Board has not waived any defenses to an award of attorney's fees and that, if the Court were to grant petitioners' motion here, the fees would be limited to $50,000.

The sole issue before this Court is whether or not the petitioners are entitled to an award of ...


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