K.N. Miller v. SERS

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kenneth N. Miller, :
Petitioner :
:
v. :
:
State Employees Retirement :
System, : No. 1650 C.D. 2015
Respondent : Argued: March 7, 2016
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION BY
JUDGE COVEY FILED: March 30, 2016
Kenneth N. Miller (Miller) petitions this Court for review of the
Pennsylvania State Employees Retirement Board’s (Board) August 12, 2015 order
affirming the Pennsylvania State Employees Retirement System’s (SERS) denial of
his request to avoid the forfeiture of his pension as a result of pleading guilty to the
federal crime of mail fraud on February 12, 2013. Miller presents two issues for this
Court’s review: (1) whether Miller’s pension should have been forfeited because
Miller was not an active judge or a state employee at the time of the incident which
gave rise to the guilty plea; and (2) whether the forfeiture violates the Eighth and
Fourteenth Amendments to the United States (U.S.) Constitution and Article I,
Section 13 of the Pennsylvania Constitution due to the excessive nature of the
forfeiture.
Miller became a member of SERS on January 5, 1970 by virtue of his
employment as a member of the judiciary. Specifically, Miller was elected as a
Magisterial District Judge. Miller executed an application for retirement benefits
from SERS with an effective January 2, 2006 retirement date. At retirement, Miller
had accrued 38.2918 years of service, including military time. Miller elected to
receive his retirement benefits under Option One and withdraw a lump sum equal to
his total accumulated deductions under Option Four. Miller terminated his service as
a Magisterial District Judge on the close of business on January 1, 2006. Subsequent
to his retirement, the Delaware County Court’s (Court) Administrative Office
(Administrative Office) asked Miller if he would serve as a Senior Magisterial
District Judge and Miller agreed to do so. Thus, pursuant to Rule 701(B) of the
Pennsylvania Rules of Judicial Administration, Miller “file[d] the application for
certification form with the Administrative Office, and upon approval, [was] eligible
for judicial assignment.”1 Pa.R.J.A. No. 701(B); see also Reproduced Record (R.R.)
at 17.
As a Senior Magisterial District Judge, the Court’s Administrator would
ask Miller if he would fill a vacancy on a particular district court for a specified
period of time. Before Miller could fill the vacancy, the Administrative Office would
process the paperwork to submit to the Pennsylvania Supreme Court, and if approved,
the Supreme Court would issue an order assigning Miller to the bench as a Senior
Magisterial District Judge. Miller would be compensated on a per diem basis for the
period of time he actually served on the bench; however, he received no payment for
the periods he was not authorized by the Pennsylvania Supreme Court to serve.
Between March 20, 2006 and January 4, 2008, Miller sat as a Senior Magisterial
District Judge in the Philadelphia Traffic Court for 177 days and was paid the gross
amount of $36,293.77 for this per diem work. See Supplemental Reproduced Record
(S.R.R.) at 31b-35b. Thereafter, the Administrative Office continued to appoint
Miller as a Senior Magisterial District Judge from January 1, 2009 through December
1
Once approved, so long as Miller continued to accept the assignments and the
Pennsylvania Supreme Court continued to appoint him, Miller would retain Senior Magisterial
District Judge status until the end of the year in which he reached age 78 (December 31, 2014). See
Pa.R.J.A. No. 701(A)(3).
2
31, 2012. See S.R.R. at 40b-64b (Supreme Court Orders dated December 12, 2008
through November 19, 2012).
In December 2011, Miller was at the Lima Regional Court in Delaware
County, Pennsylvania on business connected with his position with the Delaware
County District Justice Association. At that particular time, Miller was not sitting as
a Senior Magisterial District Judge, but had been authorized to use the court facilities
while working with the District Justice Association. During the December 2011 visit,
one of the Court Clerks told Miller that her son had received a traffic citation issued
from the Philadelphia Traffic Court, and asked if Miller knew anybody in the Traffic
Court and wanted to know what she should do.
Miller testified at the administrative hearing that “[m]y response was
listen, let me send it down, there’s only one person that I communicate with there at
all.” R.R. at 23. Miller took the citation issued to the clerk’s son, attached a sticky
note with the words “please advise,” and sent the citation and note to Philadelphia’s
Traffic Court’s Director of Courtroom Operations William Hird (Hird) by regular
mail. R.R. at 23. Miller had met Hird on the first day of Miller’s assignment to
Traffic Court and became acquainted with him while sitting as Senior Magisterial
District Judge in Traffic Court. In February 2012, Miller followed up regarding the
status of the citation with a telephone call to Hird. Hird informed Miller that he could
tell the person who issued the citation that “it’s canceled,” meaning the Court Clerk’s
son did not have to appear because “[i]t was dismissed.” R.R. at 25.
On January 31, 2013, the U.S. Attorney’s Office filed a Criminal
Information against Miller in the U.S. District Court for the Eastern District of
Pennsylvania charging him with one count of mail fraud in violation of Section 1341
of the U.S. Code, 18 U.S.C. § 1341, and aiding and abetting in violation of Section
2(a) of the U.S. Code, 18 U.S.C. § 2(a). The Criminal Information alleged that Miller
had exerted extrajudicial influence over the handling of the traffic citation he mailed
3
to Hird by requesting that the citation “be disposed of because of favoritism rather
than that it be adjudicated on the merits of the case.” S.R.R. at 2b. On February 4,
2013, the Pennsylvania Court of Judicial Discipline issued a per curiam order
suspending Miller from any and all duties as a Senior Magisterial District Judge, and
declaring him ineligible to accept further assignments as a Senior Magisterial District
Judge.
On February 12, 2013, Miller pled guilty to one count of mail fraud in
violation of 18 U.S.C. §1341 in the U.S. District Court for the Eastern District of
Pennsylvania. By March 21, 2013 letter (forfeiture letter), SERS notified Miller that
because of his guilty plea, his pension was forfeited effective February 12, 2013,
pursuant to the Public Employee Pension Forfeiture Act, commonly known as Act
140.2 At the time of the forfeiture letter, Miller was receiving a gross monthly
retirement benefit of $4,126.52. On June 13, 2013, Miller reimbursed SERS for the
overpayment of his monthly annuity for the period between February 12, 2013 and
February 28, 2013. SERS returned to Miller the contributions he paid into SERS
without interest.
On April 15, 2013, Miller filed an appeal from the forfeiture with the
Board. SERS filed an answer to the appeal. On February 12, 2014, a hearing was
held before a Hearing Officer. On February 17, 2015, the Hearing Officer issued a
Proposed Adjudication and Order denying Miller’s appeal and affirming the
forfeiture. Miller filed exceptions to the Proposed Adjudication and Order with the
Board to which SERS filed a response. On August 12, 2015, the Board accepted and
adopted the Hearing Officer’s Proposed Adjudication and Order, and denied Miller’s
appeal. Miller appealed to this Court.3
2
Act of July 8, 1978, P.L. 752, 43 P.S. §§ 1311-1315.
3
Our scope of review is limited to determining whether constitutional
rights were violated, whether the adjudication is not in accordance
with the law, whether local agency procedures have been violated, or
4
Miller first argues that his pension should not have been forfeited under
Act 140 because he was not a judge or public official at the time of his misconduct
which gave rise to his guilty plea. Both parties cite to Shiomos v. Pennsylvania State
Employees’ Retirement Board, 626 A.2d 158 (Pa. 1993), to support their positions.
Initially, Section 3 of Act 140 entitled “Disqualification and forfeiture
of benefits” provides in relevant part:
(a) Notwithstanding any other provision of law, no public
official or public employee nor any beneficiary designated
by such public official or public employee shall be entitled
to receive any retirement or other benefit or payment of
any kind except a return of the contribution paid into any
pension fund without interest, if such public official or
public employee is convicted or pleads guilty or no
defense to any crime related to public office or public
employment.
....
(c) Each time a public officer or public employee is
elected, appointed, promoted, or otherwise changes a job
classification, there is a termination and renewal of the
contract for purposes of [Act 140].
43 P.S. § 1313 (text emphasis added). Section 2 of Act 140 defines “[p]ublic
official” or “public employee” as:
Any person who is elected or appointed to any public
office or employment including justices, judges and
justices of the peace and members of the General
Assembly or who is acting or who has acted in behalf of the
Commonwealth or a political subdivision or any agency
thereof including but not limited to any person who has so
acted and is otherwise entitled to or is receiving
retirement benefits whether that person is acting on a
whether ‘any findings of fact made by the agency and necessary to
support its adjudication are not supported by substantial evidence.’
Sandusky v. Pa. State Employees’ Retirement Bd., 127 A.3d 34, 47 n.17 (Pa. Cmwlth. 2015)
(quoting Drennan v. City of Phila., Bd. of Pensions & Ret., 525 A.2d 1265, 1266 (Pa. Cmwlth.
1987)).
5
permanent or temporary basis and whether or not
compensated on a full or part-time basis. This term shall
not include independent contractors nor their employees or
agents under contract to the Commonwealth or political
subdivision nor shall it apply to any person performing
tasks over which the Commonwealth or political
subdivision has no legal right of control. However, this
term shall include all persons who are members of any
retirement system funded in whole or in part by the
Commonwealth or any political subdivision. For the
purposes of [Act 140] such persons are deemed to be
engaged in public employment.
43 P.S. § 1312 (text emphasis added). The Pennsylvania Supreme Court held in
Shiomos:
As a reasonable condition of public employment, the
employee reaffirms his commitment to perform his job with
honesty and integrity every time he or she begins a new
term of office, receives a promotion or appointment, or
experiences a change in job classification; regardless of
whether such public employment is on a full or part-time
basis. With each appointment there is a renewal of the
agreement to perform the term of public service without
violating Act 140; an agreement which encompasses all that
has gone before. Thus, whether or not a public employee’s
right to receive retirement benefits has vested, or he or she
is in actual receipt of benefits, all previous accumulated
rights to receive such benefits are subject to forfeiture by
and through the ‘renewed’ agreement which is formed each
time a person chooses to become a ‘public official’ as
defined by [Section 2 of Act 140].
Shiomos, 626 A.2d at 162-63.
In the instant case, the Board found “[Miller] was a public official or a
public employee under Act 140 by virtue of his membership in SERS, his receipt of
retirement benefits from SERS, as well as his service as Magisterial District Judge
and a Senior Magisterial District Judge.” Board Dec. at 4. Specifically, the Board
explained:
[T]here is no connection between active service or active
employment and the provisions of Act 140. [Miller] was
and is a public official or public employee under Act 140
6
due to his membership in SERS, his receipt of retirement
benefits from SERS and his appointment as a Senior
Magisterial District Judge. There simply is no
requirement that a public official or public employee be
an active employee or official at the time of the
commission of their crime; therefore, his active or inactive
status as a Senior Magisterial District Judge is irrelevant to
any analysis under Act 140. [Miller’s] exceptions in this
regard and in this vein of reasoning are therefore overruled
and dismissed.
Board Dec. at 5 (emphasis added). This reasoning, however, is contrary to Sandusky
v. Pennsylvania State Employees’ Retirement Board, 127 A.3d 34 (Pa. Cmwlth.
2015),4 wherein a similar forfeiture under Act 140 was in issue. The Sandusky Court
interpreted Act 140 as requiring the employee to be a public employee or public
official at the time of the misconduct in order for Act 140 to apply. In Sandusky,
this Court expressly held: “[B]ecause the Board had no reasonable basis whatsoever
to find that [] Sandusky was an employee of [Penn State University (PSU)] when the
underlying actions occurred, we reverse the Board’s order, [and] reinstate the pension
benefits[.]” Id. at 57.
Moreover, the Board’s reliance on the last two sentences of the
definition of “[p]ublic official” or “public employee” in Section 2 of Act 140
(“[h]owever, this term shall include all persons who are members of any retirement
system funded in whole or in part by the Commonwealth or any political subdivision.
For the purposes of [Act 140] such persons are deemed to be engaged in public
employment.”) is misplaced. Those sentences are in reference to the sentence
preceding it regarding Act 140’s inapplicability to independent contractors and
clarifying [Act 140]’s applicability to certain individuals who are “deemed to be
engaged in public employment[,]” not a catch all to include all annuitants in the
definition of public official or public employee. 43 P.S. § 1312.
4
Although the Sandusky case was not decided until after Miller filed his appeal with this
Court, it was decided before the parties’ briefs were due, but neither party cited to it.
7
This conclusion is further evidenced by the Board’s erroneous reliance
on Public School Employees’ Retirement Board v. Matthews, 806 A.2d 971 (Pa.
Cmwlth. 2002). The Board cites Matthews to support its position that all annuitants
are public officials or public employees. However, the Matthews Court explained:
We have been unable to uncover any case law in which the
courts have dealt with the precise issue of whether a
public employee must forfeit retirement benefits that
inured to her by virtue of one position of public
employment when she commits a crime related to public
employment while employed in another position of
public employment. However, Act 140 clearly and
unambiguously requires a forfeiture of benefits of a public
employee who commits a forfeitable offense. And, a statute
must be read in accordance with its plain and common
meaning when it is clear and unambiguous on its face.
Furthermore, Act 140 contains no requirement that the
pension benefits that are forfeited be necessarily connected
to the public employment related to crime the public
employee committed.
Matthews, 806 A.2d at 975 (citation omitted; emphasis added). Clearly, if Matthews
stood for the proposition that all annuitants were included in the definition of public
officials or public employees, the Court would not have had to address the issue of
which employment applied. Notwithstanding, Matthews expressly held: “Act 140
clearly and unambiguously requires a forfeiture of benefits of a public employee who
commits a forfeitable offense.” Matthews, 806 A.2d at 975. Our research has
disclosed no case law, nor does Act 140 support the Board’s contention that the mere
fact of being an annuitant makes one a public official or public employee. Thus, this
argument cannot stand.
Given the above, we must determine whether Miller was a public official
or public employee at the time he committed his crime. Miller argues that because
the acts resulting in his guilty plea occurred on or about December 2011 through
February 2012, during which time he was not serving as a Senior Magisterial District
8
Judge, nor had the Pennsylvania Supreme Court appointed him to serve in that
capacity throughout that time period, he was not a public official or public employee.
The record does not support this argument.
The Board found:
5. Subsequent to his retirement, [Miller] was asked by the
Delaware County Court Administrative Office if he would
serve as a Senior Magisterial District Judge and [Miller]
agreed to do so.
6. As a Senior Magisterial District Justice [sic], he would be
asked by the Court’s Administrator if he was interested in
filling a vacancy on a particular court for a particular period
of time. The Administrative Office would then process the
paperwork and the Supreme Court of Pennsylvania
would issue an order appointing [Miller] to the bench as
a Senior Magisterial District Judge.
Proposed Adjudication and Order at 3 (emphasis added; citations omitted).
Pursuant to Pa.R.J.A. No. 701(A)(3), as long as Miller continued to
accept the assignments and the Pennsylvania Supreme Court continued to appoint
him, Miller would have retained Senior Magisterial District Judge status from the
date of his initial application in 2006 through “the last day of the calendar year in
which [Miller] attain[ed] age seventy-eight[.]” Id. However, on February 4, 2013,
the Pennsylvania Court of Judicial Discipline ordered: “[Miller] is suspended from
any and all duties which he may have as a [S]enior Magisterial District Judge
and [Miller] henceforth shall not be eligible to accept any assignments as a [S]enior
Magisterial District Judge.” S.R.R. at 6b (emphasis added). From Miller’s 2006
application for Senior Magisterial District Judge status through his February 4, 2013
suspension, Miller was bound by the Rules Governing Standards of Conduct of
9
Magisterial District Judges (Standards of Conduct).5 Moreover, the Pennsylvania
Supreme Court issued 25 separate orders expressly appointing Miller as a Senior
Magisterial District Judge after his assignment to the Philadelphia Traffic Court
ended. See S.R.R. at 40b-64b. The first order, dated January 1, 2009, temporarily
assigned Miller as a Senior Magisterial District Judge from January 1, 2009 to
January 31, 2009. S.R.R. at 40b. The last order dated November 19, 2012, assigned
Miller as a Senior Magisterial District Judge from December 1, 2012 to December
31, 2012. S.R.R. at 64b. In addition, Miller was eligible to be assigned by the
Pennsylvania Supreme Court until the Pennsylvania Court of Judicial Discipline’s
February 4, 2013 order suspending him.
As the Shiomos Court explained: “With each appointment there is a
renewal of the agreement to perform the term of public service without violating Act
140; an agreement which encompasses all that has gone before.” Shiomos, 626 A.2d
at 162. The clear language of Act 140 states: “Each time a public office or public
employee is . . . appointed . . . or otherwise changes a job classification, there is a
termination and renewal of the contract for purposes of [Act 140].” 43 P.S. §
1313(c). As Miller retained Senior Magisterial District Judge status at the time the
misconduct occurred, this Court holds that Miller was a public official and/or public
employee subject to Act 140 at the time he committed the crime. Shiomos.
Accordingly, the Board properly denied Miller’s appeal from the Act 140 forfeiture
of his pension benefit.6
5
See Standards of Conduct, Terminology, “Application” wherein it provides: “All senior
magisterial district judges, active or eligible for recall to judicial service, shall comply with the
provisions of these Conduct Rules[.]” Id.
6
Although the Board denied Miller’s appeal for a different reason, “we may affirm an
agency’s decision ‘on other grounds where grounds for affirmance exist.’” Turner v.
Unemployment Comp. Bd. of Review, 899 A.2d 381, 385 (Pa. Cmwlth. 2006) (quoting Kutnyak v.
Dep’t of Corr., 748 A.2d 1275, 1279 n.9 (Pa. Cmwlth. 2000)).
10
Miller next contends that the forfeiture of his pension benefits violates
the Eighth and Fourteenth Amendments to the U.S. Constitution and Article I,
Section 13 of the Pennsylvania Constitution due to the excessive nature of the
forfeiture. Miller cites to Scarantino v. Public School Employees’ Retirement Fund,
68 A.3d 375 (Pa. Cmwlth. 2013), to support his position.
In Scarantino, the Court explained:
Article I, Section 13 of the Pennsylvania Constitution
provides that: ‘Excessive bail shall not be required, nor
excessive fines imposed, nor cruel punishments inflicted.’
The Eighth Amendment to the [U.S.] Constitution provides
that ‘excessive bail shall not be required, nor excessive
fines imposed, nor cruel and unusual punishments inflicted.
...
The Excessive Fines Clause of the Eighth Amendment is
only implicated if the fine is a punishment. Forfeitures
are ‘fines’ if they constitute punishment for an offense.
The relationship between a public school employee and
the []SERS is contractual in nature. Section 3(a) of [Act
140] provides for the mandatory disqualification and
forfeiture of benefits upon ‘conviction[ ] or plea[ ] of guilty
or no defense to any crime related to public office or public
employment.’ Section 3(b) [of Act 140] provides that the
conviction or plea is a breach of the public employee’s
contract with his employer. In order to receive retirement
benefits, an employee must satisfy all of the conditions
precedent such as minimum retirement age and requisite
years of service. An additional condition precedent for
eligibility to receive pension benefits is that an employee
cannot have been convicted of one of the enumerated
crimes or a substantially the same federal crime. Such a
conviction breaches the employee’s contract and renders
him ineligible to receive pension benefits.
Scarantino, 68 A.3d at 384-85 (citations omitted; emphasis added). The Scarantino
Court held: “The forfeiture of [the p]etitioner’s pension was not a fine imposed for
11
conviction of his offense. . . . Rather, [the p]etitioner’s forfeiture of his pension
resulted from a breach of the contract between [the p]etitioner and []SERS.” Id. at
385 (footnote omitted).
Miller asserts that he had no contract with SERS after he was no longer
assigned to the Philadelphia Traffic Court, because he “was not active or operating as
a judge at the time of his misconduct[;]” thus, the forfeiture was a punishment rather
than a breach of contract. Miller Br. at 10. We disagree. Each Supreme Court
appointment of Miller assigning him as a Senior Magisterial District Judge was “a
renewal of the agreement to perform the term of public service without violating Act
140; an agreement which encompasses all that has gone before.” Shiomos, 626
A.2d at 162 (emphasis added). After Miller’s assignment in the Philadelphia Traffic
Court ended, the Pennsylvania Supreme Court assigned him as a Senior Magisterial
District Judge beginning January 1, 2009 through his last appointment which ended
December 31, 2012, thus, his agreement to serve without violating Act 140 continued
through December 31, 2012. Because Miller’s misconduct occurred during the time
the Pennsylvania Supreme Court approved him for Senior Magisterial District Judge
status and his misconduct clearly violated Act 140, we hold that the forfeiture was a
breach of contract. Accordingly, “[t]he Excessive Fines Clause of the Eighth
Amendment is [not] implicated[.]” Scarantino, 68 A.3d at 384.
For all of the above reasons, the Board’s order is affirmed.
___________________________
ANNE E. COVEY, Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kenneth N. Miller, :
Petitioner :
:
v. :
:
State Employees Retirement :
System, : No. 1650 C.D. 2015
Respondent :
ORDER
AND NOW, this 30th day of March, 2016, the Pennsylvania State
Employees Retirement Board’s August 12, 2015 order is affirmed.
___________________________
ANNE E. COVEY, Judge