Regina Kahles v. City of Cincinnati

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 17a0470n.06
No. 15-4035
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
REGINA KAHLES, et al., )
FILED
Aug 15, 2017
)
Plaintiffs-Appellants, ) DEBORAH S. HUNT, Clerk
)
v. )
ON APPEAL FROM THE UNITED
)
STATES DISTRICT COURT FOR THE
CITY OF CINCINNATI, )
SOUTHERN DISTRICT OF OHIO
)
Defendant-Appellee. )
)
)
BEFORE: DAUGHTREY, KETHLEDGE, STRANCH, Circuit Judges.
MARTHA CRAIG DAUGHTREY, Circuit Judge. In two separate lawsuits, a total of ten
plaintiffs, all former employees of the City of Cincinnati, alleged that the City and the Board of
Trustees of the Cincinnati Retirement System (CRS), by altering the qualifications for “disability
retirement” for city employees, violated provisions of the federal and state constitutions, as well
as Ohio state law. After consolidating the two actions, the district court granted summary
judgment to the defendants1 on all federal claims and on the plaintiffs’ claim that the City’s
changes in the retirement plan violated the Ohio Constitution’s prohibition on retroactive
legislation. See Ohio Const., art. II, § 28. The district court declined to exercise supplemental
jurisdiction over the remaining state-law claims.
1
The district court dismissed the Board as a defendant, ruling that the Board cannot sue or be sued in its
own right. The plaintiffs do not now contest that determination, leaving only the City of Cincinnati as a named
defendant in this appeal.
No. 15-4035, Kahles, et al. v. City of Cincinnati
Before this court, the plaintiffs reiterate their assertion that the City’s actions that stripped
them of their disability-retirement status amounted to a procedural-due-process violation by
infringing upon vested rights without providing adequate pre-deprivation and post-deprivation
protections. The plaintiffs also contend that the City’s alteration of the qualifications necessary
to obtain disability benefits contravened the mandate of Article II, Section 28 of the Ohio
Constitution that restricts the power of state legislative bodies to pass retroactive laws.
We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Each of the ten plaintiffs—Regina Kahles, Ronald Bear, Benjamin Cohee, Yvonne Biggs,
Norma Ayers, Tina Head, Robert Rechel, Paul Rechtin, William Huxell, and Norma Ragland—
formerly had been employed by the City of Cincinnati and were eligible to participate in the
City’s retirement plan that was administered by the Board of Trustees of the Cincinnati
Retirement System. The Cincinnati Municipal Code (CMC) provided that employees like the
plaintiffs, who had accumulated sufficient creditable service and who were “disabled by reason
of an accidental or nonaccidental cause,” could be retired “on a disability retirement allowance”
“provided the medical director after a medical examination of such member shall certify that
such member is mentally or physically incapacitated for the further performance of duty, and
such incapacity is likely to be permanent, and such member should be retired.” CMC § 203-41.
Between 1991 and 2010, either the Board’s medical director or the Board itself
determined that each of the plaintiffs was sufficiently disabled to retire on a disability retirement
allowance. Such a determination, however, did not create an expectation that the benefits could
not be terminated. In fact, section 203-55 of the CMC then in effect provided explicitly:
Should the medical director or such competent physician designated by the board
report and certify to the board that a disability beneficiary is able to engage in a
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gainful employment paying not less than the prevailing compensation for the
employment classification held by such disability beneficiary at the time of
retirement, and should the board concur in such report, then such beneficiary’s
retirement allowance shall cease.
(Emphasis added.) Moreover, that same section of the municipal code noted that “[o]nce each
year after the retirement of a member on a retirement allowance for disability, the board
may . . . require any disability beneficiary who has not yet attained age 60 to undergo a medical
examination.”
Despite being authorized since 1962 to request such disability audits, the Board actually
required very few re-examinations of former employees on disability retirement. In fact, Paula
Tilsley, the pension fund manager for the City’s retirement system, declared in a sworn affidavit
that no audits were finalized in 2009 or, presumably, in 2010 or 2011. She stated further, “In
2012, there were 16 disability audits. In 2013, there were 20 disability audits. In 2014, there
were 2 disability audits.”
The increase in the number of disability audits coincided with the consideration and
passage of an amended section 203-55 of the municipal code, effective April 10, 2013. The new
provision removed the language that previously had permitted an employee to obtain a disability
retirement allowance if unable to engage in gainful employment that paid at least the prevailing
compensation for the job at the time of the employee’s retirement. In its place, the City adopted
language that required termination of disability retirement allowances should the Board’s
medical director “recommend to the board that a disability beneficiary is able to engage in a
gainful employment,” regardless of the level of compensation. (Emphasis added.) According to
Tilsley, the reason for the change in the definition of “disability” in the municipal code provision
“was to make sure that the CRS Board’s interpretation was in line with industry best practices.”
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Pursuant to the policies and procedures adopted by the CRS Board, the audit process is
initiated by a letter directing the retiree to send all pertinent medical records to the Board’s
medical director, Dr. Paul Hogya,2 and to report to Hogya within 30 days for a medical
examination. At the conclusion of that examination, Hogya must prepare a report summarizing
his findings and recommending that disability benefits either be continued or terminated. Hogya
then submits his report and recommendation to a committee of the Board, which reviews
Hogya’s submissions and makes its own recommendation to the full Board on the propriety of
continued benefit payments. Should the Board vote to terminate payments, the employee is
informed of his or her appeal rights, which include the opportunity to submit to Hogya, in a
timely manner, any additional medical evidence bearing on the employee’s medical condition.
Hogya must examine any new submissions and again draft a report to the full Board
recommending that the appeal be granted or denied. The Board’s vote on Hogya’s
recommendation constitutes the final administrative say in the matter.
After the disability retirement allowance for each of the ten plaintiffs was terminated
through this audit process, the aggrieved retirees sought legal redress for the loss of their
benefits. Plaintiffs Kahles, Bear, Cohee, Biggs, Ayers, and Head filed suit in federal district
court, raising the following claims: a facial procedural-due-process challenge; an as-applied
procedural-due-process challenge; a substantive-due-process challenge; a claim that the changed
definition of “disability” in the municipal code constituted a retroactive application of a statute in
violation of the Ohio Constitution; a § 1983 civil-conspiracy claim; and a state-law breach-of-
fiduciary-duty claim. See Kahles, et al. v. City of Cincinnati, et al., No.1:13-cv-560 (S.D. Ohio
2
Although Hogya serves as the Board’s medical director, he operates more like an independent contractor
and not an employee of the City. In fact, he estimated that in the four or five years prior to his April 2015 deposition
in this litigation, only one to eight percent of his “professional work week was devoted to City of Cincinnati work.”
(Page ID 519)
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2014). A second group of plaintiffs consisting of Rechel, Rechtin, Huxell, and Ragland filed a
similar lawsuit in Ohio state court, raising the same causes of action as the Kahles complaint, but
also including claims for a writ of mandamus, breach of contract, unjust enrichment, declaratory
judgment, and an unconstitutional taking of property. See State of Ohio ex rel. Rechel v. City of
Cincinnati, No. A 1400704 (Ohio Ct. of Common Pleas Mar. 5, 2014).
The Rechel complaint was removed to federal court, the two lawsuits were consolidated,
and both sides moved for summary judgment. The district court found no merit to any of the
plaintiffs’ due process claims, to the claim that the City had violated Article II, Section 28 of the
Ohio Constitution by passing a law with retrospective application, or to the Rechel plaintiffs’
federal-constitutional takings claim. The district court thus granted summary judgment to the
City on those causes of action. Because the plaintiffs did not oppose dismissal of their claims for
civil conspiracy, unjust enrichment, and breach of fiduciary duty, the court granted judgment in
favor of the City on those allegations as well. Having disposed of all federal claims raised by the
plaintiffs, the district court declined to exercise supplemental jurisdiction over the Rechel
plaintiffs’ other state-law claims and remanded them to state court for resolution. On appeal, the
plaintiffs now allege error only in the district court’s resolution of their procedural-due-process
allegations and of the claim of a violation of the provisions of Article II, Section 28 of the Ohio
Constitution.
DISCUSSION
Standard of Review
We review de novo a district court’s grant of summary judgment. See Dodd v. Donahoe,
715 F.3d 151, 155 (6th Cir. 2013). Summary judgment will be granted Aif the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
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matter of law.@ Fed. R. Civ. P. 56(a). A genuine dispute of material fact exists only when,
assuming the truth of the non-moving party=s evidence and construing all inferences from that
evidence in the light most favorable to the non-moving party, there is sufficient evidence for a
trier of fact to find for that party. See Ciminillo v. Streicher, 434 F.3d 461, 464 (6th Cir. 2006).
A non-moving party cannot withstand summary judgment, however, by introduction of a Amere
scintilla@ of evidence in its favor. Id.
In this case, the plaintiffs and the defendant each moved for summary judgment, asserting
that no genuine disputes of fact remained to be resolved. We have recognized that “summary
judgment [is] not necessarily appropriate solely because the parties filed cross-motions for
summary judgment.” B.F. Goodrich Co. v. U.S. Filter Corp. 245 F.3d 587, 593 (6th Cir. 2001).
Nevertheless, here, the parties agree on the operative facts of the case. Only the proper
application of the relevant law to those facts remains in dispute, making a grant of summary
judgment to one party or the other appropriate.
Due Process Claim
Despite the wide-ranging procedural and substantive due process claims set forth in their
complaints in this litigation, the plaintiffs limit their appellate argument on this subject to their
assertion that the City failed to provide them with adequate opportunities to challenge Hogya’s
determinations that the plaintiffs no longer meet the municipal code’s definition of employees
eligible for disability retirement benefits. Specifically, the plaintiffs claim that their procedural-
due-process rights have been violated because Hogya serves both as the initial auditor of the
members’ disability status and as the sole physician who evaluates any appeal from his own
determination. In a similar vein, the plaintiffs contend that the lack of any independent review of
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Hogya’s decision denies them the opportunity to challenge effectively any erroneous decision by
the City’s medical director.
In an effort to highlight the procedural trap in which the plaintiffs claim they find
themselves, they point to the deposition testimony of Hogya that he could not recall ever
reversing one of his initial disability recommendations. The plaintiffs also direct us to the
deposition testimony of Cheryl Volk, an administrative technician in the retirement division of
the department of the city manager. Volk claimed that she likewise was unaware of any
disability appeals that have been granted in the audit process. Furthermore, we note that Paula
Tilsley stated in her affidavit, “Of the 31 people whose disability retirement allowance ceased
after being audited, 4 did not appeal, and 10 appealed but did not submit additional medical
evidence. The remaining appeals were denied.” Even so, Tilsley went on to explain that the
Board had overturned Hogya’s recommendation on three occasions involving the doctor’s denial
of initial disability retirement applications.
Although the plaintiffs understandably believe that they should continue to receive the
disability retirement allowances originally awarded to them, and although they point out that
some of the plaintiffs have suffered deteriorating medical conditions since their retirement, they
do not contend that Hogya’s audit determinations of their disability status are incorrect in light of
the new standard adopted in the municipal code. Additionally, plaintiffs’ arguments that the
appeal process creates a serious risk of an erroneous deprivation of benefits because Hogya is the
sole evaluator of his own medical findings on appeal and because no independent review of
Hogya’s appellate decision is available to the retirees are without merit.
First, although Hogya is indeed the only person who actually rules on the merits of the
appeal during the internal, administrative process, it is untrue that no other medical professionals
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have an effective say in the audit determination. Hogya testified in his deposition that he
reviews all additional medical evidence that a retiree submits in support of a claim for continued
disability retirement allowances. Moreover, as Tilsley explained, “During the appeals
process . . ., people are permitted to submit as much additional medical evidence as they wish.”
(Emphasis added.)
Second, the plaintiffs likewise misstate the level of independent review to which Hogya’s
administrative audit determinations are subject. As the Ohio Supreme Court reaffirmed in State
ex rel. Cydrus v. Ohio Public Employees Retirement System, 938 N.E.2d 1028, 1032 (Ohio
2010), “mandamus is an appropriate remedy where no statutory right of appeal is available to
correct an abuse of discretion by an administrative body.” (Quoting State ex rel. Pipoly v. State
Teachers Ret. Sys., 767 N.E.2d 719, 722 (Ohio 2002)). Although Cydrus involved a challenge to
a decision of the Board of the Ohio Public Employees Retirement System, and not to a
determination of the Board of the CRS, the situation in Cydrus is analogous to that faced by the
plaintiffs here: “The determination of whether a . . . member is entitled to the continued receipt
of disability-retirement benefits is within the exclusive authority of the . . . board, and the board’s
denial of an appeal from the termination of these benefits is final and not subject to appeal.” Id.
at 1032 (citations omitted). Consequently, “[b]ecause there is no right to appeal the . . . board’s
decision terminating disability-retirement benefits, mandamus is an appropriate remedy.” Id.
Thus, the plaintiffs are not without recourse to seek review to determine whether Hogya abused
the discretion with which he was vested.
By now, it is well established that “[t]he essence of due process is the requirement that a
person in jeopardy of serious loss (be given) notice of the case against him and opportunity to
meet it.” Mathews v. Eldridge, 424 U.S. 319, 348 (1976) (citation and internal quotation marks
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omitted). In order to comport with constitutional mandates, “[a]ll that is necessary is that the
procedures be tailored, in light of the decision to be made, to the capacities and circumstances of
those who are to be heard to insure that they are given a meaningful opportunity to present their
case.” Id. at 349 (citation and internal quotation marks omitted).
The plaintiffs in this matter do not contend that they did not receive adequate notice of
the Board’s intent to audit their entitlement to future disability retirement allowances.
Furthermore, pursuant to the procedures established by the Board for the audit, the plaintiffs
were permitted—within a designated, reasonable time period—to present whatever medical
evidence they could muster to contradict Hogya’s initial determination that they were “able to
engage in a gainful occupation.” Finally, under Ohio legal principles, the plaintiffs were able to
seek a writ of mandamus in the state-court system to challenge any alleged abuse of discretion on
the part of the City’s medical director in reaching his conclusions. The plaintiffs thus received
the process to which they were due, and their appellate challenge in this regard fails.
Retroactivity Claim
The plaintiffs also argue that Ordinance No. 83-2013, which altered the Cincinnati
Municipal Code’s definition of “disability” used to determine eligibility for disability retirement
allowances, constituted a retroactive law in violation of Article II, Section 28 of the Ohio
Constitution. Pursuant to that constitutional proscription, “The general assembly shall have no
power to pass retroactive laws,” a prohibition that applies with equal force to alterations to
charter amendments. See State ex rel. Youngstown v. Mahoning Cty. Bd. of Elections,
647 N.E.2d 769, 772 (Ohio 1995).
Under Ohio law, “a retroactive law is defined as one that takes away or impairs vested
rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches
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a new disability, in respect to transactions or considerations already past.” State ex rel. Jordan v.
Indus. Comm’n of Ohio, 900 N.E.2d 150, 151-52 (Ohio 2008) (citation and internal quotation
marks omitted). “A vested right is one that so completely and definitely belongs to a person that
it cannot be impaired or taken away without the person’s consent.” Id. at 152 (citations and
internal quotation marks omitted). In other words, a right will not be considered “vested”
“unless it constitutes more than a mere expectation or interest based upon an anticipated
continuance of existing laws.” Id. (citations and internal quotation marks omitted).
Recitation of the characterization of “vested rights” under Ohio law highlights the
weakness of the plaintiffs’ argument on this issue. Even prior to the passage of Ordinance 83-
2013, individuals on disability retirement were subject to possible annual audits, the results of
which could strip them of future benefits. The plaintiffs’ concession in their brief that the City
retained the authority to alter the eligibility requirements for receiving such benefits, further
established that the plaintiffs’ insistence on a continuation of the status quo was nothing more
than a “mere expectation . . . based upon an anticipated continuance of existing laws.”3
Moreover, any rights or interests the plaintiffs possessed in benefits already received were not
infringed by the passage of Ordinance 83-2013. Cheryl Volk testified that the changes in the
audit process were to be applied prospectively only, and the plaintiffs offer no evidence that the
City has made or intends to make any effort to recoup benefit payments made prior to audit
determinations following the amendment to the ordinance.
The plaintiffs claim that they “had a settled, reasonable expectation that, absent an actual
improvement in their physical conditions, they would continue to receive their disability
benefits.” Nothing in the plaintiffs’ earlier benefit grants or in the prior version of CMC § 203-
3
The plaintiffs contend, however, that any changes in the audit standards are applicable only to audits
conducted on those individuals who sought an initial determination of eligibility for benefits after the effective date
of the amendment.
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55 offers support for an assertion that, but for an improvement in the plaintiffs’ physical
conditions, their disability retirement allowances could not be terminated. In fact, both the prior
and the present versions of CMC § 203-55, when setting forth the authority of the Board to
request an annual medical examination of recipients of such benefits, provide:
Should any disability beneficiary who has not yet attained the age of 60 refuse to
submit to at least one medical examination in any such year by the medical
director or physician designated by the board, the beneficiary’s allowance may be
discontinued until withdrawal of such refusal; and should the refusal continue for
one year, all such beneficiary’s rights in and to a pension may be revoked by the
board.
(Emphasis added.)
Clearly, therefore, the plaintiffs were on notice that their receipt of benefits could
terminate for reasons other than improvement in their medical conditions. Consequently, any
expectation on their part of continued receipt of benefits absent a return to relative health was not
reasonable. Furthermore, under Ohio law, because the amendments to CMC § 203-55 were
prospective in their application, the City did not contravene the mandate of Article II, Section 28
of the Ohio Constitution by updating the working definition of “disability” in order to conform
“with industry best practices.”
CONCLUSION
For the reasons stated, the Board’s denials of the plaintiffs’ appeals of the
discontinuances of their disability retirement allowances were not finalized without the plaintiffs
being accorded the procedural process they were due. Furthermore, under Ohio law and the facts
of this case, the City’s decision to alter the standard by which an individual’s disability status
would be determined and subsequent payments would be made did not amount to an improper
implementation of a retrospective law. We therefore AFFIRM the judgment of the district court.
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