Dr. Dorothy June Hairston-Brown, Petitioner
Public School Employees' Retirement Board, Respondent
Argued: September 12, 2013
BEFORE: HONORABLE DAN PELLEGRINI, President Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge.
ROCHELLE S. FRIEDMAN, Senior Judge
Dr. Dorothy June Hairston-Brown (Claimant) petitions this Court for review of the Public School Employees' Retirement Board's (Board) December 11, 2012 order denying Claimant's request to credit her with one year of credited service for each of the 2004-2005 through and including 2007-2008 academic years. Claimant presents five issues for this Court's review: (1) whether the Board abused its discretion and erred as a matter of law by failing to adopt the parties' Stipulations of Fact (Stipulations) and, on the basis of such Stipulations, to give Claimant one year of credited service for each of the years in question; (2) whether the Board's conclusion that Claimant was not entitled to receive credited service for the 2004-2005 through and including the 2007-2008 school years for her employment with the Laboratory Charter School of Communication and Language (Laboratory) and Ad Prima Charter School (Ad Prima) was not supported by substantial evidence and an error of law; (3) whether the Board erred as a matter of law in concluding Claimant, rather than the employers, had a duty to account for the hours worked at Laboratory and Ad Prima in order to receive the correct amount of credited service for each employer; (4) whether Claimant's procedural and substantive due process rights were violated by the Public School Employees' Retirement System's (PSERS) Retirement Benefits Specialist Supervisor and the Board's Executive Staff Review Committee (ESRC) when they impermissibly commingled prosecutorial and adjudicatory functions with regard to the October 14, 2009 and February 18, 2011 determinations; and, (5) whether Claimant's procedural and substantive due process rights were violated by the Board's reversal of Claimant's initial determination of her retirement benefits which resulted in a reduction of Claimant's years of service, final average salary and monthly retirement benefits without prior notice and/or hearing.
Claimant was first enrolled in the PSERS in September 1967, by virtue of her employment with the Philadelphia School District (PSD). In 1983, Claimant founded Main Line Academy (Main Line), a Pennsylvania private academic school. Claimant was and continues to be Main Line's President and Executive Director. Following her employment termination from PSD on June 29, 1993, Claimant retired from PSERS with an effective retirement date of July 1, 1993, based on $43, 490.00 as a final average salary and 27.87 years of credited service.
In October 1997, Claimant incorporated Laboratory, a Philadelphia charter school, and became employed by Laboratory as its full-time salaried Chief Executive Officer. Laboratory reenrolled Claimant in PSERS effective June 1, 1998, by virtue of her Laboratory employment. In January 2003, Claimant incorporated Ad Prima, a Philadelphia charter school, and became employed by Ad Prima as its fulltime salaried Chief Administrative Officer. Ad Prima reported Claimant to PSERS by virtue of her Ad Prima employment.
On March 21, 2005, Claimant incorporated the Agora Cyber Charter School (Agora), a cyber charter school for Pennsylvania residents, and it was granted a charter for a period commencing July 1, 2005. Agora enrolled its employees in PSERS, but did not open a contract record for Claimant, and never reported to PSERS any salary or service information for Claimant. On November 14, 2005, Claimant and Brien Gardiner established The Cynwyd Group (Cynwyd) with the Pennsylvania Department of State as a limited liability company. Claimant had an ownership interest in Cynwyd. On May 10, 2006, Cynwyd entered into a service agreement with Agora to provide supervision, direction and management of Agora. On June 4, 2007, Claimant incorporated the Planet Abacus Charter School (Planet Abacus), a Philadelphia charter school, and it was granted a charter for a period commencing July 1, 2007. Planet Abacus enrolled its employees in PSERS, but did not open a contract record for Claimant, and never reported to PSERS any salary or service information for Claimant. On June 25, 2007, AcademicQuest was established as a Pennsylvania limited liability company, with Claimant as its President. AcademicQuest entered into a service agreement with Planet Abacus dated March 16, 2007, to provide educational services to Planet Abacus beginning July 1, 2007.
On or about May 21, 2008, PSERS contacted Claimant regarding her simultaneous full-time employment for Laboratory and Ad Prima as reported by both school employers to PSERS. Claimant was asked to provide a daily work schedule for the two schools beginning with the 2004-2005 through and including the 2007-2008 school years. PSERS made this inquiry because it wanted to determine that credible service was justified and that there was no overlap in service between the entities. On or about May 27, 2008, Laboratory's Business Manager Anthony Smoot (Smoot) provided PSERS with copies of Claimant's job duties for both Laboratory and Ad Prima and, in the accompanying letter, provided a breakdown of Claimant's daily work schedule for both Laboratory and Ad Prima for the 2004-2005 through 2007-2008 school years. The May 27, 2008 letter set forth Claimant's weekly hours as follows: 27 hours for Laboratory on Monday, Tuesday and Friday, 7:00 a.m. to 12:00 p.m., Wednesday, Thursday, 12:30 p.m. to 4:00 p.m., and Saturday, 8:00 a.m. to 1:00 p.m.; and 26 hours for Ad Prima on Monday, Tuesday, 12:30 p.m. to 5:00 p.m., Friday, 12:30 p.m. to 4:00 p.m., and Saturday, 1:30 p.m. to 5:00 p.m., for a total of 53 hours per week between the two schools. At the time PSERS received the information, it accepted the May 27, 2008 letter as an accurate reflection of the hours Claimant worked at Laboratory and Ad Prima during the 2004-2005 through 2007-2008 school years.
Following Claimant's submission of a retirement application, she retired from PSERS, effective December 1, 2008. By letter dated April 23, 2009, PSERS notified Claimant of her initial retirement benefit based on a December 1, 2008 retirement date. The initial retirement letter stated that Claimant's benefit was calculated based on her option selection and the latest salaries and service on file with PSERS. The letter further informed Claimant that it was a preliminary benefit and may not match the amount shown on the estimate PSERS prepared. The initial retirement letter advised Claimant that her gross monthly benefit would be $14, 150.11, which benefit Claimant began receiving thereafter.
In late 2008 to early 2009, PSERS senior staff members asked PSERS Retirement Benefits Specialist Supervisor Troy Peechatka (Peechatka) to review concerns about Philadelphia charter school annuitants' returns to service and possible pension forfeiture issues as reported by articles in the Philadelphia Inquirer. Peechatka was directed to review all the names listed in the articles to determine if there were any PSERS annuitants. Claimant was named in the news articles. As part of his review, Peechatka reviewed information and documents from various sources, including PSERS' own records and records from the Department of Education's Office of Chief Counsel. Peechatka did not seek information directly from Claimant, Laboratory or Ad Prima. Based on Peechatka's review of Claimant's account and the information he received, he determined that, in addition to the full-time service Laboratory and Ad Prima reported for Claimant during the 2004-2005 through 2007-2008 school years, Claimant also performed services for Agora, Planet Abacus, Cynwyd, AcademicQuest and Main Line. Because the documents Peechatka reviewed conflicted with the information Laboratory and Ad Prima reported to PSERS regarding Claimant's service, Peechatka believed an adjustment had to be made to Claimant's account. As the adjustment to Claimant's account could be significant, pursuant to his normal course, Peechatka sought guidance from the PSERS Office of Chief Counsel and ESRC.
On October 14, 2009, Peechatka prepared a Determination (October 14, 2009 Determination) stating that PSERS was in receipt of documents reflecting that Claimant had worked either as an employee or independent contractor for a number of other entities while she was reported as a full-time administrator for both Laboratory and Ad Prima. The October 14, 2009 Determination reduced Claimant's monthly PSERS pension by removing all the salary and service credit from the 2004-2005 through and including the 2007-2008 school year, thereby subtracting 4.00 years of service credit and all corresponding salary, and added in 3.29 years of service credit from Laboratory beginning July 1, 1998 through December 31, 2001, which salary, service and retirement contributions had previously been unreported for Claimant. The October 14, 2009 Determination reduced Claimant's final average salary from $322, 092.88 to $154, 063.55. In addition, it reduced Claimant's monthly benefit from $14, 150.11 (gross) to $3, 253.63 (gross). The October 14, 2009 Determination notified Claimant of her finalized retirement benefit based on an adjusted retirement date of December 1, 2008, of $154, 063.55 as a final average salary and 31.34 years of credited service resulting in a gross monthly benefit of $3, 253.63.
Claimant timely appealed from the October 14, 2009 Determination to the ESRC. After the October 14, 2009 Determination, PSERS sent Claimant's counsel an index of the documents upon which it had relied to make its October 14, 2009 Determination as well as the documents themselves. Claimant was afforded an opportunity to provide additional information and documentation to the ESRC prior to its Determination, which Claimant did in the form of an Affidavit. Claimant submitted a February 10, 2010 Affidavit, in which she stated, inter alia: that she requested Smoot to provide PSERS with general information about her daily work schedule and job responsibilities for the 2004-2005 through 2007-2008 school year; that the information Smoot provided in his May 27, 2008 letter regarding her daily work schedule was generally correct; that in addition to the work Claimant performed for Laboratory and Ad Prima, she also performed consulting work as an employee of Cynwyd and AcademicQuest for Agora and Planet Abacus; that the work she performed as a consultant for Agora and Planet Abacus was similar to the work she performed for Laboratory and Ad Prima; that she worked for Agora and Planet Abacus as an employee of Cynwyd and AcademicQuest in order to ensure the successful development, operation and management of Agora and Planet Abacus so that Agora and Planet Abacus would be as successful and award winning as Laboratory and Ad Prima; that the work she did for Agora and Planet Abacus was with other Cynwyd and AcademicQuest staff and it occurred on nights and weekends; and that she also performed consulting work for Main Line, which did not require the same level of attention as Agora and Planet Abacus.
On February 18, 2011, the ESRC issued its Determination (February 18, 2011 Determination) denying Claimant's request to reverse the adjustments made to her retirement account in the October 14, 2009 Determination. In particular, the February 18, 2011 Determination concluded that Claimant had not provided sufficient, credible evidence substantiating her claim that she is entitled to retirement credit during the 2004-2005 through 2007-2008 school years. The February 18, 2011 Determination described the discrepancies and missing data that PSERS found, and explained that it did not have objective evidence on which it could rely to substantiate Claimant's daily schedule and appropriate salary for the years in question. The ESRC found that the adjustments PSERS made to Claimant's salary and service were correct.
On or about March 18, 2011, Claimant filed a timely appeal and request for an administrative hearing. On January 12 and 13, 2012, an administrative hearing was held before a Hearing Officer. On August 3, 2012, the Hearing Officer filed an opinion and recommendation that Claimant's request to credit her with one year of credited service for the 2004-2005 through and including 2007-2008 academic years be denied and her appeal be dismissed. Claimant filed exceptions to the Hearing Officer's opinion and recommendation, and requested oral argument before the Board. On December 6, 2012, the Board denied Claimant's oral argument request, adopted the Hearing Officer's Findings of Fact, Conclusions of Law, Discussion and Recommendation, and denied Claimant's request to credit her with one year of credited service for the academic years in question. Claimant appealed to this Court.
Claimant first argues that the Board abused its discretion and erred as a matter of law by failing to adopt the parties' Stipulations and, on the basis of such Stipulations to give Claimant one year of credited service for each of the years in question. Specifically, Claimant contends that both parties stipulated: Laboratory reported Claimant as working 261 days during the 2004-2005 school year, 261 days during the 2005-2006 school year, 260 days during the 2006-2007 school year and 260days during the 2007-2008 school year; Ad Prima reported Claimant as working 261days during the 2004-2005 school year, 261 days during the 2005-2006 school year, 260 days during the 2006-2007 school year and 260 days during the 2007-2008 school year; Claimant received a salary from Laboratory and Ad Prima; and that required member contributions were made. The Stipulations also contained two additional factual statements regarding Claimant's employment status: (1) "In October 1997, Claimant incorporated [Laboratory] . . . and became employed by LABORATORY as a full-time salaried employee . . . ." and (2) "In January 2003, Claimant incorporated [Ad Prima] . . . and became employed by AD PRIMA as a full-time salaried employee . . . ." Reproduced Record (R.R.) at 35a (emphasis added).
Claimant maintains that Section 211.2 of the Board's Regulations, 22 Pa. Code § 211.2, defines a full-time employee as employed for at least 5 hours per day or 25 hours per week; and, Section 8302(a) of the Public School Employees' Retirement Code (Retirement Code), provides that "a full-time salaried school employee shall receive one year of credit for each school year . . . ." 24 Pa.C.S. § 8302(a). Therefore, the Board erred in failing to adopt the parties' Stipulations and grant Claimant one year of credited service for each year she worked as a full-time employee. We disagree. "Stipulations of fact are binding on the parties and the Court. This Court, however, may draw its own legal conclusions." Selective Way Ins. Co. v. Commonwealth, 1 A.3d 950, 955 n.3 (Pa. Cmwlth. 2010) (citation omitted).
The Pennsylvania Supreme court has held:
[U]nder the Retirement Code, an employee can only receive retirement credit for the time period where the employee actually engaged in work for the school district and received regular remuneration for that work. In cases of doubt, the Board determines whether an individual is a school employee for purposes of the Retirement Code.
Hoerner v. Pub. Sch. Employees' Ret. Bd., 546 Pa. 215, 227, 684 A.2d 112, 118 (1996) (emphasis added). The issue in this case is not whether Claimant was hired as a full-time salaried employee as the Stipulation indicates, but rather how many hours Claimant "actually engaged in work for the school district" during the time periods in question. Id. Further, the Stipulation refers to the number of days Laboratory and Ad Prima "reported" Claimant worked; it does not mean the parties agreed she "actually" worked that number of days. Thus, the Stipulation, as adopted, ...