Block v. Orange County Employee’s Retirement System
Court Of Appeals in the State of California
Fourth Appellate District, Division of Three
Filed April 10, 2008
Cite as 2008 SOS 2145

CA interprets “disability allowance” in Government Code Section 31838.5

This case turns on the interpretation of the term “disability allowance” as used in Government Code section 31838.5, part of the County Employees Retirement Law of 1937, Government Code, Section 31450 et seq. (CERL).

The pertinent facts are as follows:

From January 1967 until October 1, 1994, Toby L. Block was employed by the Buena Park Fire Department. On his employment with the department, he was a member of the California Public Employees’ Retirement System (CalPERS). His last assignment was as a fire captain.

The Buena Park Fire Department merged with the Orange County Fire Authority on October 1, 1994. Consequently, from October 1, 1994 to March 1, 2001, Block worked as a fire captain with the Orange County Fire Authority. As an employee of the Orange County Fire Authority, Block was a member of the Orange County Employees’ Retirement System (OCERS).

December 2001, Block applied concurrently for service-connected disability retirement from both OCERS and CalPERS.

Consequently, Block’s application for service-connected disability retirement benefits under OCERS and regular service retirement benefits from CalPERS was approved, both of which have an effective date of May 20, 2002.

Since Block retired concurrently from OCERS and CalPERS, Government Code section 31838.5 permitted him to use his highest average salary under either retirement system to calculate his retirement benefits under both systems.

Complications on this case arose in the manner of interpretation of the term “disability allowance” as used in Government Code section 31838.5, part of the County Employees Retirement Law of 1937, Government Code, Section 31450 et seq. (CERL).

Relying on section 31838.5, OCERS reduced Block’s service connected disability retirement benefits in pro rata basis so that his total retirement benefit would not be greater than what he would have received had his employment been with just one entity.

Block disputed the reduction and consequently requested an administrative hearing.

Hearing was held and resulted with the conclusions of the administrative referee that OCERS was not authorized under section 31838.5 to reduce Block’s retirement benefit and further recommend that Block’s annual retirement benefits from OCERS be equal to 50 percent of his final compensation.

The OCERS Board of Retirement declined to adopt the referee’s recommendation and opted to review the matter de novo based on the evidence presented to the referee. Consequently, the board conducted its review.

August 29, 2005 the board issued a final decision concluding that OCERS has appropriately applied the pro rata reduction to Block’s retirement benefit in accordance with Gov. Code Section 31838.5.

In the end, the board concluded that it is absurd and defies common sense if Block would be awarded about 125% of pay as a combined retirement benefit.

Block on his side, filed a peremptory petition for a writ of mandate under Code of Civil Procedure section 1094.5 challenging the OCERS board’s decision with the Superior Court of California.

The Superior Court heard the matter in October and November 2006. On November 27, 2006, the Superior Court entered a minute order granting the petition.

The Superior Court concluded that section 31838.5, did not authorize a reduction in Block’s service connected disability retirement benefits.

The court reasoned that had the Legislature wanted this statute to guarantee that the total retirement benefit (disability, service) would not be more than what Block would have earned had he stayed with any given employer or entity, then it could have easily stated in that wise.

In ruling in Block’s favor, the Superior Court stated that its conclusion is compelled by the fact that the California legislature has not passed. . . a statute that a person in Block’s position is NOT entitled to BOTH his full service pension AND his full disability pension.

OCERS timely appealed the judgment of the Superior Court of California favoring Block (entered on January 3, 2007) in the Court Of Appeals of the State of California, Fourth Appellate District, Division of Three.

On appeal, the appellate court ventilated on the sole issue of determining what is the meaning of the term “disability allowance” as used in Section 31838.5.

In resolving the issue, the appellate court held that on the basis of the language of section 31838.5, along with the statutory scheme, as well as the well settled principles of statutory interpretation and legislative history, the term “disability allowance” means all the benefits a member receives from reciprocal systems or from the California Public Employees’ Retirement System (CalPERS) for retiring concurrently due to disability , irregardless of those benefits being labeled as disability retirement or service retirement.

Further, the court said that the Block’s total retirement benefits from CalPERS and county could not exceed disability retirement benefit that he would have been entitled to had he worked for county for the entire 35 years.

Thus, accordingly, the decision of the Orange County Employees’ Retirement System (OCERS) Board of Retirement was upheld and the judgment of the trial court reversed.