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06/19/97 MARY A. SIMMONDS v. STATE EMPLOYEES'

June 19, 1997

MARY A. SIMMONDS
v.
STATE EMPLOYEES' RETIREMENT SYSTEM, THE PENNSYLVANIA STATE UNIVERSITY, INTERVENOR; APPEAL OF: PA STATE UNIVERSITY, INTERVENOR; MARY A. SIMMONDS V. STATE EMPLOYEES' RETIREMENT SYSTEM, THE PENNSYLVANIA STATE UNIVERSITY, INTERVENOR; APPEAL OF: STATE EMPLOYES' RETIREMENT BOARD



Appeal from the Order of the Commonwealth Court Entered August 8, 1995, at No. 761 C.D. 1994, Reversing the Order of the State Employees' Retirement System Entered March 23, 1994, at No. 184-36-6107 Before: Flaherty, C.j., Zappala, Cappy, Castille And Nigro, JJ. Madame Justice Newman did not participate in the consideration or decision of this case.

The opinion of the court was delivered by: Zappala

JUSTICE ZAPPALA

DECIDED: JUNE 19, 1997

This appeal presents the issue of whether an individual enrolled in a residency program in a state university medical center is a "state employee" for purposes of receiving service credit pursuant to the State Employees' Retirement Code (Code), 71 Pa.C.S. § 5101, et seq. For the reasons set forth herein, we hold that medical residents are not state employees and are therefore ineligible to purchase state credit for time spent in a residency program.

From July 1, 1980, through June 30, 1981, Dr. Mary A. Simmonds, Appellee, served at the Milton S. Hershey Medical Center of Pennsylvania State University (Medical Center) as a Resident VI in medical oncology. This position is held by a medical school graduate who desires to become certified in oncology by the American Board of Internal Medicine. To become board certified, an individual must complete residency training in a hospital program approved by the American College of Graduate Medical Education. The purpose of the certification process is to ensure that residents are provided sufficient training to become specialists in their respective fields.

During her assignment as a Resident VI, Appellee performed her duties under the supervision of an attending Medical Center physician, who was ultimately responsible for the treatment of patients. *fn1 Appellee devoted fifty to sixty hours per week to direct patient care. Her duties included performing physical examinations, taking patient histories, and prescribing medication. The patients treated by Appellee were billed the same rate charged for services rendered by staff physicians, although the billing number used was that of the attending physician. *fn2 Appellee also supervised the work of junior residents and other hospital personnel, and instructed medical students and nurses in physical diagnosis, chemotherapy and hematology.

Appellee paid no tuition during her residency and received a stipend of $16,932.00 to cover living expenses. The amount paid was far below that which Appellee could have earned as a staff physician or as a physician in private practice. Although Appellee received health insurance, malpractice insurance, sick leave, and vacation time, she did not receive the same benefit package as other Medical Center physicians. *fn3

Following her residency, she became an assistant professor of medicine at the Medical Center and enrolled in the State Employes' Retirement System (SERS) on July 1, 1981. *fn4 Appellee's employment with the Medical Center continued until July 31, 1990. She subsequently attempted to purchase state credit for her one year of service as a resident. SERS denied her request. Pennsylvania State University filed a Motion to Intervene, which was granted by the State Employes' Retirement Board (Board) on August 23, 1991.

An administrative hearing was held and Appellee's request to purchase one year of state credit was again denied. The hearing examiner concluded that residents at the Medical Center were not state employees for the purpose of receiving service credit from the retirement system. Both Appellee and SERS filed exceptions to the hearing examiner's opinion. Appellee also filed a Petition to Reopen Record, which the Board denied.

The Board affirmed the decision of the hearing examiner, holding that although medical residents were clothed with indicia of employee status, the purpose of residencies, internships and fellowships was to further one's education. While recognizing that the case did not involve the Retirement Code, the Board relied on Philadelphia Association of Interns and Residents v. Albert Einstein Medical Center, 470 Pa. 562, 369 A.2d 711 (1976), for the proposition that medical residents have a unique relationship with the hospitals they serve which is unlike that of employer/employee.

The Commonwealth Court reversed, finding that the Board's reliance on Einstein was misplaced. It held that pursuant to Kapilian v. State Employes' Retirement System, 144 Pa. Commw. 80, 600 A.2d 698 (1991), alloc. denied, 530 Pa. 656, 608 A.2d 31 (1992), medical residents were state employees entitled to purchase state credit pursuant to the Code. The court remanded the matter to determine the proportional amount of time Appellee spent as a resident providing services for the Medical Center.

Judge Pellegrini filed a Dissenting opinion which was joined by Judge Doyle. The Dissent found that a person who is enrolled in a program for the purpose of meeting educational requirements does not fit within the common usage of the term "employee." It further stated that to the extent Kapilian is applicable, it should be reversed.

On appeal from a final adjudication of an administrative board, our scope of review is limited to a determination of whether the board committed an error of law, whether there has been a violation of constitutional rights, or whether necessary factual findings are supported by substantial evidence. Christiana v. Public School Employes' Retirement Board, 543 Pa. 132, 669 A.2d 940 (1996).

Pursuant to ยงยง 5303(b) and 5504 of the Code, an active member of the retirement system may purchase credit for previous "state service." "State service" is defined as service rendered as a state employee. 71 ...


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