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Tuesday, September 25, 2012

Slip Sliding Away

I've just run across a PERS horror story that tops almost every single one I've read about.  I now have first hand information from the affected party so I feel confident that I understand what happened.  Doris (a pseudonym) retired from her employer in 2002 on a disability.  The disability was because of a brain injury.  She hadn't been working all that long and I don't know how old she was at retirement.  Nevertheless, the story goes like this.  Doris' initial computed benefit was $3500 per month.  Because Doris was unaware of how PERS really worked, she didn't think anything about the benefit.  Fast forward 5 years to 2007.  Doris gets her repayment/adjustment letter, but doesn't understand it and doesn't ask about it (remember the brain injury?).  PERS discovers that Doris not only had been over credited by $2000 for 1999, but also that they has miscomputed her benefit by more than $2000 per month.  So Doris' benefit is adjusted downward to $1400 per month, leaving a balance due of $59,000 resulting NOT from the 1999 over credit, but from the computational error PERS made in 2002.  PERS decides not to collect starting in 2007; I'm not clear why but they seem to apply the Circuit Court's ruling to ALL collections, not just those due to the 1999 over credit.  Of course, you can guess what has now happened.  If you guessed that PERS wants its $59,000 you would be absolutely correct.  But, PERS has decided, at least initially, to take a hard line and insist that all repayments be recovered in 10 years or less.  There is, to the best of my knowledge, no statutory requirement that PERS collect in 10 years or less.  It is simply a policy that the Board has adopted to collect the 1999 over credit.  However, in its usual inflexible, hidebound system, it has determined that Doris must suffer the additional indignity to repay her "owings" in about 10 years.  They are proposing that her current $1500 monthly benefit be REDUCED BY $500 per MONTH, leaving Doris nearly destitute.  While I have written to PERS about this case and am doing everything I can to help Doris, I'm afraid she has been a victim of a very cruel and cynical ploy by PERS to hew to an inflexible and irrelevant standard.  My reading of ORS 238.715 indicates that PERS must get permission from a beneficiary to reduce benefits by more than 10% due to a recovery action.  This reduction is 33% of Doris' monthly benefit.  Moreover, she suffered an initial 60% reduction in benefit due to PERS original error.  Now to add insult to injury, Doris is expected to repay an unseemly amount to liquidate an overpayment that occurred 10 years ago, and had nothing to do the PERB error in 1999.  PERS' fundamental error here is to confound two different issues and expect a single solution to both for their convenience, without regard to its effect on the payee.  PERS should have begun collecting the mistaken amount (about $57,000) in 2007, rather than let it continue to ride another 5 years.  Now Doris is 10 years older than when she was when she retired.  PERS squandered an opportunity to begin the repayment without court injunction 5 years ago.  While it wouldn't have been any fairer to Doris, PERS wasn't overrun with the idea that payments had to be collected in 10 years or less.  PERS totally misinterpreted the Court's injunction and applied it to a clerical error unrelated to the error under litigation.  Totally screwed up.

I don't understand PERS' inflexibility in this case.  Post your comments and thoughts in the comment section.  I'm sure Doris would appreciate your sentiment, positive or negative.  I hope that PERS gets a heart and a brain and decides to give Doris a much longer payment schedule so that she doesn't risk slip sliding away.    


mrfearless47 said...

To clarify an earlier point, PERS did, sort of, get Doris' permission to reduce her benefit. She was given the option of going to collections. In this case, she would not be dealing with Oregon's Department of Revenue because she lives in California.

mrfearless47 said...

Here are the statutes relevant to Doris' case. Lest you doubt that PERS has exceeded its statutory authority, see subsection (3) of the statute:

Here are the revised Oregon statutes which deal with PERS overpayment
recovery options. As you mentioned, mrf, there seems to be a 10%
limitation. Seems like a lawyer should be involved in this case. Perhaps
that is what it would take to get PERS attention here.

238.715 Recovery of overpayments; rules. (1) If the Public Employees
Retirement Board determines that a member of the Public Employees
Retirement System or any other person receiving a monthly payment from
the Public Employees Retirement Fund has received any amount in excess
of the amounts that the member or other person is entitled to under this
chapter and ORS chapter 238A, the board may recover the overpayment or
other improperly made payment by:

(a) Reducing the monthly payment to the member or other person for as
many months as may be determined by the board to be necessary to recover
the overpayment or other improperly made payment; or

(b) Reducing the monthly payment to the member or other person by an
amount actuarially determined to be adequate to recover the overpayment
or other improperly made payment during the period during which the
monthly payment will be made to the member or other person.

(2)(a) Any person who receives a payment from the Public Employees
Retirement Fund and who is not entitled to receive that payment,
including a member of the system who receives an overpayment, holds the
improperly made payment in trust subject to the board's recovery of
that payment under this section or by a civil action or other

(b) The board may recover an improperly made payment in the manner
provided by subsection (1) of this section from any person who receives
an improperly made payment from the fund and who subsequently becomes
entitled to receive a monthly payment from the fund.

(c) The board may recover an improperly made payment by reducing any
lump sum payment in the amount necessary to recover the improperly made
payment if a person who receives an improperly made payment from the
fund subsequently becomes entitled to receive a lump sum payment from
the fund.

(3) Unless the member or other person receiving a monthly payment from
the fund authorizes a greater reduction, the board may not reduce the
monthly payment made to a member or other person under the provisions of
subsection (1) of this section by an amount that is equal to more than
10 percent of the monthly payment.

Rivrdog said...

Doris' case is simply one more reason that the defense against Strunk should have been against the collections process, and nothing else, because collections case law is probably the clearest of that muddled form of jurisprudence.

Doris needs to go to court, post haste, and get a judicial finding on comparative liability. In Oregon, if you have less than 30% liability, you can't be held responsible.

Also, I suspect that the reason PERS decided to go for all of it so quickly is that they cheated on Doris' HIPAA rights, found out what her prognosis was about, and decided she wouldn't live out an actuarial lifetime.

The HIPAA violation plus the attempt, across State lines, to collect money, puts her case into the RICO section of Federal code, so if the HIPAA violation can be proven, PERS and some of it's people are toast: Sec 1983 civil rights violation plus RICO equal personal liability plus jail time. That's a vicious sword for her attorney to swing. I hope she gets adequate legal representation, and gets it soon.

George Schneider

mrfearless47 said...

George: we continue to go round and round on theis issue. I still believe that Oregon statues covering the public employee retirement system cannot be trumped by a federal law that applies to different types of collections. As for the potential HIPAA violation, that may be another matter altogether. In that case, and I am quite familiar with the HIPAA regulations married to a physician, there might be a lutigible issue, although it might be difficult to prove in court. I've got PERS to agree that the statute is governing and we may be able to get some favorable resolution yet. I just don't see the point of a federal case, literally, when it isn't really clear to me that the federal statutes even apply in this case.

Unknown said...

The state is really good about going after individuals like Doris while throwing away millions of dollars with no accountability.

To state government Doris is an easy target especially when you have lots of regulations to work with and many lawyers to use.

However I have watched the state blow more than $150 Million dollars on the Newport - Eddyville highway project using a design they were told would not work. A project that will end up being six years and almost two hundred million over budget.

Or the recent state police radio project that wasted millions and revealed the state police coordinator lied, or a failed state police data project both wasting millions of dollars.

I am not as familiar with PERS but would not be surprised to learn they have undertaken projects of their own with similar failures as other state agencies so they can proudly they undertook collections for a few thousand dollars and have done their jobs while ignoring the bigger issues.

Unknown said...

PERS has exceeded it's authority, no question. Plus, her brain injury calls into question her ability to interpret and apply the complex PERS rules. PERS needs to fix this asap...She is being victimized through no fault of her own.