IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2009-NMCA-109
Filing Date: August 14, 2009
Docket No. 28,108/28,109 (Consolidated)
DENNIS GONZALES and
TOBIAS PINO,
Petitioners-Appellants,
v.
STATE OF NEW MEXICO PUBLIC
EMPLOYEES RETIREMENT
ASSOCIATION, and its BOARD,
Respondent-Appellee.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
James A. Hall, District Judge
Law Offices of E. Justin Pennington
E. Justin Pennington
Albuquerque, NM
for Appellants
G.T.S. Khalsa
Santa Fe, NM
for Appellee
Youtz and Valdez, P.C.
Shane Youtz
Brandt Milstein
Albuquerque, NM
for Amicus Curiae American Federation
of State, County & Municipal Employees
(AFSCME Council 18)
1
OPINION
FRY, Chief Judge.
{1} In these consolidated cases, Petitioners Dennis Gonzales and Tobias Pino challenge
the decision of the Public Employees Retirement Board (the Board) denying them disability
retirement benefits. Relying on a statutory provision applicable to a member of the Public
Employees Retirement Association (PERA) who “is not a currently employed, contributing
employee of an affiliated public employer,” the Board concluded that each Petitioner met
this definition when his application for benefits was filed. NMSA 1978, Section 10-11-
10.1(C)(2) (1993). Because of this employment status, the Board determined that neither
Petitioner was eligible for benefits because neither was “totally incapacitated for any gainful
employment.” Section 10-11-10.1(C)(2)(a). We hold that the Board applied the wrong
standard for determining disability. Because each Petitioner was a currently employed,
contributing employee at the time his disability was incurred, the Board should have utilized
the standard applicable to such an employee, which permits disability benefits if the
employee is “totally incapacitated for continued employment with an affiliated public
employer.” Section 10-11-10.1(C)(1)(a). We reverse and remand for reconsideration of
each Petitioner’s application in light of the proper standard. We also deny PERA’s motion
to dismiss Gonzales’s appeal.
BACKGROUND
Gonzales
{2} Petitioner Gonzales was employed as a juvenile correctional officer by the Children,
Youth & Families Department (CYFD) beginning in 1997. He sustained an injury to his
back, later diagnosed as a herniated disk, on March 16, 2004. He was placed on leave and
began receiving workers’ compensation benefits on September 1, 2004. By January 2005,
Gonzales had exhausted all of his accrued annual and sick leave, and in March 2005, he
reached maximum medical improvement. When his employer determined that there was no
suitable employment within CYFD that could accommodate Gonzales’s restrictions, it
terminated him effective August 15, 2005. Upon learning of his impending termination,
Gonzales applied with PERA for disability retirement benefits on August 5, 2005. PERA
determined that more information was needed for Gonzales’s application, and the application
was finally deemed complete on September 30, 2005.
{3} The following facts are undisputed. At the time of his application for benefits,
Gonzales had five or more years of PERA service credit, he was not able to continue the job
he had when he was injured, but he was not disabled from commensurate gainful
employment. He made no PERA employee contributions in 2005, with the possible
exception of June 2005.
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{4} PERA informed Gonzales on October 13, 2005, that its Disability Review Committee
(DRC) recommended denial of disability benefits “because the information provided did not
show that [he] was totally and permanently incapacitated from performing any gainful
employment.” Gonzales appealed the recommendation, and the appeal was heard by a
hearing officer.
{5} At the hearing, Gonzales argued that under the proper interpretation of the applicable
statute, he was a currently employed, contributing PERA member at the time of his
application on August 5, 2005. As such, he maintained that he was entitled to disability
benefits because he was incapacitated for continued employment with an affiliated public
employer. He argued alternatively that his membership status should be determined at the
time his disability arose.
{6} The hearing officer filed his recommended decision, in which he rejected Gonzales’s
argument and concluded that the determinative date was the date Gonzales’s application for
benefits was complete, September 30, 2005. However, even if the date of the initial
application—August 5, 2005—were deemed conclusive, the hearing officer determined that
Gonzales was not a currently employed, contributing employee at that time because he made
no contributions to PERA in August or September 2005, and he was terminated on August
15, 2005. As a result of this status, the hearing officer determined that Gonzales would be
entitled to benefits only if he could establish that he was incapacitated for any gainful
employment. Because Gonzales stipulated that he was not so incapacitated, the hearing
officer concluded that Gonzales was not entitled to benefits.
{7} The Board adopted the hearing officer’s recommended decision and Gonzales
appealed the Board’s decision to the district court. The district court affirmed the Board’s
decision, and we granted Gonzales’s petition for certiorari.
Pino
{8} Petitioner Tobias Pino was employed as a firefighter with the City of Albuquerque
since 1989. On November 10, 2000, Pino sustained an on-the-job injury to his left knee.
Although the City terminated his employment in August 2001, the City’s personnel board
reinstated him retroactively. Pino was employed by the City until he resigned on April 12,
2006, at which time he was on leave without pay. The parties stipulated that Pino’s last
PERA contributions were made in December 2005.
{9} Pino filed his application for disability benefits with PERA on January 18, 2006.
PERA informed Pino that it required more information, and Pino’s application was deemed
complete March 1, 2006. The DRC denied Pino disability retirement benefits, and Pino
appealed. A hearing officer presided over the appeal hearing.
{10} Pino argued that the date of his injury was the date for determining his employment
status and that on the date of his injury he was a currently employed, contributing member
of PERA. Consequently, he argued, he was entitled to disability retirement benefits if he
was not able to continue employment with an affiliated public employer. The hearing officer
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rejected this argument and concluded that the operative date for determining employment
status was the date of Pino’s application. Because Pino was not a currently employed,
contributing employee on that date, he was entitled to disability retirement benefits only if
he established that he was totally incapacitated for any gainful employment. The hearing
officer concluded that Pino had failed to meet this standard and affirmed the DRC’s denial
of benefits. The Board adopted the hearing officer’s recommended decision, and Pino
appealed to the district court, which affirmed. We granted Pino’s petition for certiorari.
DISCUSSION
{11} On certiorari, “we conduct the same review of an administrative order as the district
court sitting in its appellate capacity, while at the same time determining whether the district
court erred in the first appeal.” Talamante v. Pub. Employees Ret. Bd., 2006-NMCA-032,
¶ 6, 139 N.M. 226, 131 P.3d 76 (filed 2005) (internal quotation marks and citation omitted).
“We review the Board’s decision to determine whether (1) [it] acted fraudulently, arbitrarily
or capriciously; (2) the final decision was not supported by substantial evidence; or (3) [the
Board] did not act in accordance with [the] law.” Id. (alterations in original) (internal
quotation marks and citation omitted). To the extent our review requires statutory
interpretation, we undertake de novo review. Id.
{12} This case presents issues of statutory construction. We must determine the meaning
of “currently employed, contributing employee” as used in Section 10-11-10.1(C)(1) of the
Public Employees Retirement Act (the Act), NMSA 1978, Sections 10-11-1 to -141 (1987,
as amended through 2007). In addition, we must determine the triggering event for assessing
an employee’s status under the Act’s provisions governing disability retirement benefits.
{13} Our Supreme Court recently articulated the role of appellate courts in construing a
statute in Bishop v. Evangelical Good Samaritan Society, 2009-NMSC-036, ___ N.M. ___,
212 P.3d 361. The Court first observed that “if the meaning of a statute is truly clear—not
vague, uncertain, ambiguous, or otherwise doubtful—it is of course the responsibility of the
judiciary to apply the statute as written and not to second-guess the [L]egislature’s selection
from among competing policies.” Id. ¶ 10 (internal quotation marks and citation omitted).
But the Court also “cautioned against an overly simplistic application of the plain-meaning
rule.” Id. The Court stated that statutory construction should begin with an examination of
the statute’s language, which “is the primary indicator of legislative intent,” and that the
reviewing court should read all parts of a statute together “so that all parts are given effect.”
Id. ¶ 11. The appellate court “must also consider the practical implications and the
[L]egislative purpose of a statute, and when the literal meaning of a statute would be absurd,
unreasonable, or otherwise inappropriate in application, [the court must] go beyond the mere
text of the statute.” Id.
Relevant Provisions of the Act
{14} We begin with an overview of the Act’s relevant provisions. The Act sets out the
requirements for an award of disability retirement benefits as follows:
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The disability review committee may retire a member on account of
disability before the time the member would otherwise be eligible for
retirement if the following requirements are satisfied:
(1) the member applying for disability retirement was a member
at the time the disability was incurred;
(2) a written application . . . has been filed with the association
by the member or by the member’s affiliated public employer;
(3) employment is terminated within forty-five days of the date
of approval of the application for disability retirement;
(4) if:
(a) the member has five or more years of service credit;
....
(5) the member submits to all medical examinations and tests . .
.;
(6) the disability review committee makes the determination
required under Subsection C of this section.
Section 10-11-10.1(B)(1)-(6).
{15} There is no dispute that Gonzales and Pino each satisfied requirements (1), (2), (4),
and (5). Because their applications were denied, we cannot determine whether Subsection
(B)(3) would have been satisfied. Therefore, the requirement at issue in this case is
Subsection (B)(6), the determination of the DRC under Subsection C of the statute.
{16} Before turning to Subsection C, we focus on requirement (1) above because it
informs our analysis of Subsection C. Notably, requirement (1) states that the “member
applying for disability retirement” must be “a member at the time the disability was
incurred.” Section 10-11-10.1(B)(1). There are two important aspects of this requirement:
the applicant must be (a) a “member”, and (b) “at the time the disability was incurred.”
{17} The Act defines a “member” in Section 10-11-2 as:
[either (1)] a currently employed, contributing employee of an affiliated
public employer, or [(2)] a person who has been but is not currently
employed by an affiliated public employer, who has not retired and who has
not received a refund of member contributions[.]
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Section 10-11-2(M). Thus, the Act draws a distinction between a member who is “a
currently employed, contributing employee” and one who is no longer working for a public
employer, providing the latter has not retired and has not obtained a refund of his or her
contributions to PERA. Section 10-11-10.1(C)(1).
{18} Either type of member may be eligible for disability retirement benefits if he or she
was a member “at the time the disability was incurred.” Section 10-11-10.1(B)(1). A former
employee of an affiliated public employer whose date of disability occurred after receiving
a refund of member contributions or during retirement is not eligible to receive disability
retirement benefits. However, a person who was “a currently employed, contributing
employee” at the time disability was incurred would be eligible for benefits. Section 10-11-
10.1(C)(1).
{19} We turn now to Section 10-11-10.1(C). Assuming that an applicant satisfies
requirements (1) through (5) of Section 10-11-10.1(B), the remaining requirement is that the
DRC “makes the determination required under Subsection C.” Section 10-11-10.1(B)(6).
Subsection C provides:
The disability review committee shall review applications for
disability retirement to determine whether:
(1) if the member is a currently employed, contributing employee
of an affiliated public employer:
(a) the member is mentally or physically totally
incapacitated for continued employment with an affiliated public employer;
and
(b) the incapacity is likely to be permanent; or
(2) if the member is not a currently employed, contributing
employee of an affiliated public employer:
(a) the member is mentally or physically totally
incapacitated for any gainful employment; and
(b) the incapacity is likely to be permanent.
Section 10-11-10.1(C)(1)(a)-(b) to (2)(a)-(b).
{20} We make two observations about Subsection C. We first note that the statute
imposes two different standards for awarding disability benefits. Depending on the
member’s status, the member must demonstrate total physical and mental incapacity that is
likely to be permanent either (a) “for continued employment with an affiliated public
employer” or (b) “for any gainful employment.” Section 10-11-10.1(C)(1)(a), (2)(a). The
second type of incapacity is obviously more difficult to demonstrate than the first. Our
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second observation is that the choice of which incapacity standard applies depends on
whether the member is (a) “a currently employed, contributing employee of an affiliated
public employer” or (b) “not a currently employed, contributing employee of an affiliated
public employer.” Section 10-11-10.1(C)(1), (2) (emphasis added). A member of the first
category must demonstrate the lesser standard of incapacity—total incapacity “for continued
employment with an affiliated public employer” as opposed to total incapacity “for any
gainful employment.” Section 10-11-10.1(C)(1)(a), (2)(a).
{21} Looking at the Act’s definition of “member” in conjunction with the two standards
of incapacity justifying an award of disability retirement benefits, we are able to make some
preliminary assessments of the Legislature’s intent when it enacted Section 10-11-10.1. The
Act has two, and only two, definitions of “member.” Similarly, Section 10-11-10.1 provides
two standards of incapacity, depending on the type of member who has applied. It therefore
makes sense that the two incapacity standards correspond to the two definitions of
“member.” One standard applies to a member who is defined as “a currently employed,
contributing employee of an affiliated public employer,” and the other applies to a member
who is defined as “a person who has been but is not currently employed by an affiliated
public employer, who has not retired and who has not received a refund of member
contributions.” Section 10-11-2(M).
{22} We further observe that a member who is approved to receive disability retirement
benefits is entitled to only one year of such benefits, regardless of which standard of
incapacity applied to the member. Section 10-11-10.1(D). At the end of that year, PERA
reevaluates the member under the more difficult standard: total incapacity “for any gainful
employment.” See § 10-11-10.1(C)(2)(a), (D), (E), (F).
{23} Against this backdrop, we turn to the parties’ arguments.
The Parties’ Contentions
{24} Gonzales and Pino argue that their eligibility for disability retirement benefits should
be governed by the less demanding standard of incapacity applicable to “currently employed,
contributing employee” members. Section 10-11-10.1(C)(1). They appear to make two
alternative arguments in support of their contention. First, they maintain that their eligibility
for benefits should be determined by their membership status at the time disability was
incurred, not at the time they applied for benefits. Both Gonzales and Pino were
undisputedly employed and making PERA contributions at the time their respective
disabilities were incurred. Second, even if the determinative date is the date of the benefits
application, they contend that they should be deemed to have been “currently employed,
contributing employee[s]” because they were still employed at that date even if they were
not technically making contributions. Id.
{25} PERA responds that the operative date for determining member status is the date a
member files an application for disability retirement benefits. In support of this position,
PERA maintains that we should focus on the use of the word “is” in Section 10-11-
10.1(C)(1), which applies the less onerous standard of incapacity to a “member [who] is a
7
currently employed, contributing employee.” Id. The more burdensome standard of
incapacity is reserved for a “member [who] is not a currently employed, contributing
employee.” Section 10-11-10.1(C)(2). Thus, according to PERA, because the determination
of member status under Section 10-11-10.1(C) is made during review of an existing
application, the member’s employment situation should be assessed as it exists at the time
of the application. In addition, PERA argues that even if a member is technically employed
on the date of his or her application, the member cannot rely on the less onerous standard of
incapacity unless the member is also making PERA contributions.
Interpretation of the Act
{26} The Act is silent as to the date for determining the status of a member for purposes
of disability retirement benefits. The Act references “the time the disability was incurred”
in its requirement that an applicant for benefits have been a member at that time. Section
10-11-10.1(B)(1). But, as noted by PERA, the Act also references the time the application
for benefits was submitted, stating that “[a]fter approval, payment [of benefits] shall be
effective commencing the first of the month following submission of the initial application.”
Section 10-11-10.1(D). Neither reference provides much guidance as to the date for
assessing membership status.
{27} One potential guidepost is the language used to distinguish between the two types
of members. One type is “a currently employed, contributing employee of an affiliated
public employer” while the other is “a person who has been but is not currently employed
by an affiliated public employer, who has not retired and who has not received a refund of
member contributions.” Section 10-11-2(M). Bearing these definitions in mind, at the time
their respective disabilities were incurred, Gonzales and Pino were both “currently
employed” and “contributing” employees. However, at the time of their applications, each
was “currently employed” but not “contributing.” Thus, at the time of their applications,
they fell into a nonexistent category because they fit neither of the categories of “member”
defined in Section 10-11-2(M). They did not fit the first category because they were no
longer contributing to PERA, and they did not fit the second category because they were still
currently employed.
{28} It would be absurd to conclude that Gonzales and Pino fell into a limbo status not
addressed by the Act. Consequently, we read into the definition of membership the notion
that one cannot be deemed a “currently employed” employee unless one is also a
“contributing” employee. See Bishop, 2009-NMSC-036, ¶ 9 (explaining that where
“adherence to the literal use of words would lead to injustice, absurdity or contradiction, the
statute will be construed according to its obvious spirit or reason, even though this requires
the rejection of words or the substitution of others” (internal quotation marks and citation
omitted)). In other words, a member is either “a currently employed, contributing
employee” or “a person who has been but is not [a] currently employed[, contributing
employee of] an affiliated public employer who has not retired and who has not received a
refund of member contributions.” Section 10-11-2(M). This reading of the definition of
“member” is consistent with the two categories of membership described in Section 10-11-
8
10.1(C): (1) one who “is a currently employed, contributing employee” and (2) one who “is
not a currently employed, contributing employee.” Section 10-11-10.1(C)(1), (2).
{29} With this in mind, it is clear that as of the date disability was incurred, both Gonzales
and Pino were currently employed, contributing employees and that as of the date of their
applications, they were not. Their status determines the extent of incapacity each had to
demonstrate in order to receive disability retirement benefits. We therefore look for
guideposts that can assist us in determining which date triggers assessment of membership
status.
{30} The applicable regulations articulate the objective of the Act’s disability retirement
scheme. “The intent of the Board in promulgating these rules is to encourage continued
employment of members while providing protection in cases of disability.” 2.80.1000.6
NMAC (12/28/00) (emphasis omitted). Viewing the Act through this lens, we conclude that
the operative date for determining a member’s status for purposes of disability retirement
benefits is the date disability is incurred.
{31} If the determinative date were the date of the member’s application for benefits, a
member would feel urgency about applying for benefits even before the member knows the
extent of his or her disability or the likelihood of permanency. For example, in the case of
Gonzales, he was injured in November 2000 but did not apply for benefits until January
2006. In the intervening five years, he received workers’ compensation benefits and
exhausted his annual and sick leave. When he learned that his public employer could not
accommodate his physical limitations, he applied for disability retirement benefits. At that
point, although he was still technically an employee of CYFD, he was no longer making
PERA contributions because he was not being paid. If his membership status was
determined at the time of his application, he would have to demonstrate the more onerous
standard of incapacity for any gainful employment. Consequently, he would reduce this
burden of demonstrating eligibility if he applied for benefits before he exhausted his leave
while he was still making PERA contributions. In other words, had he applied for benefits
a year sooner than he did, he likely could have demonstrated entitlement to benefits under
the lesser burden of Section 10-11-10.1(C)(1).
{32} Advocating such premature applications for disability retirement benefits is contrary
to the stated goal of “encourag[ing] continued employment of members while providing
protection in cases of disability.” 2.80.1000.6 NMAC. Indeed, tying the assessment of
membership status to the application date does just the opposite. It encourages members to
cut short their employment and seek disability benefits before they are certain they will
really need those benefits.
{33} By contrast, if a member’s status is assessed at the time disability is incurred, the
member may remain an employee of a public employer, continue making contributions, and
access support avenues other than disability retirement benefits, such as workers’
compensation or accrued leave, in the hope that the member can regain the ability to return
to work before circumstances compel the member to apply for disability retirement benefits.
9
This scenario is consistent with the intent articulated in the regulations and protects the
public fisc from premature and possibly unnecessary payment of benefits.
{34} PERA maintains that if the Legislature had wanted to tie assessment of membership
status to the date disability was incurred, it would have used language other than the present
tense “is” and “is not” in Section 10-11-10.1(C) when referring to the DRC’s review of
applications. We are not persuaded. This kind of hypertechnical scrutiny of a statute’s
language is an example of the “overly simplistic application of the plain-meaning rule” our
Supreme Court cautioned against in Bishop, 2009-NMSC-036, ¶ 10. We conclude that
Section 10-11-10.1(C) should instead be interpreted so that it is consistent with the purpose
of the Act’s disability retirement provisions. We therefore hold that the applications of
Gonzales and Pino should have been evaluated according to their membership status at the
time their respective disabilities were incurred. Because the Board’s decision was not in
accordance with this interpretation of the Act, it must be reversed. See Talamante, 2006-
NMCA-032, ¶ 6 (explaining that appellate court may reverse an administrative decision if
the board or agency “did not act in accordance with [the] law” (alteration in original)
(internal quotation marks and citation omitted)).
Motion to Dismiss Gonzales’s Appeal
{35} After briefing was completed in this appeal, PERA filed a motion to dismiss
Gonzales’s appeal because he withdrew all of his PERA contributions in March 2007.
PERA contends that “[o]nly PERA members are eligible to receive PERA disability
retirement benefits” and that “even if [Gonzales] were to prevail in this matter, he would not
be eligible to receive the disability retirement benefits that is [sic] the basis of his claim.”
Gonzales responds that if his application for benefits, filed on August 5, 2005, had been
granted, he would have been entitled to benefits for only one year until August 2006. In
other words, all of his benefits had accrued before he withdrew his contributions.
{36} These issues are properly determined by the Board in the first instance because they
may involve factual disputes, and we remand for the Board’s consideration. To the extent
PERA contends that Gonzales’s claim is moot, we disagree. “A case is moot when no actual
controversy exists, and the court cannot grant actual relief.” Gunaji v. Macias,
2001-NMSC-028, ¶ 9, 130 N.M. 734, 31 P.3d 1008 (internal quotation marks and citation
omitted). Given our reversal of the Board’s denial of benefits, if Gonzales is correct that his
benefits accrued before he withdrew his contributions, then he may be entitled to benefits.
Thus, his claim is not moot. We therefore deny PERA’s motion to dismiss Gonzales’s
appeal.
CONCLUSION
{37} For the foregoing reasons, we reverse the district court’s judgment affirming the
Board’s denial of disability retirement benefits and remand for proceedings consistent with
this opinion.
{38} IT IS SO ORDERED.
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______________________________________
CYNTHIA A. FRY, Chief Judge
WE CONCUR:
____________________________________
MICHAEL D. BUSTAMANTE, Judge
____________________________________
CELIA FOY CASTILLO, Judge
Topic Index for Gonzales v. State of New Mexico Public Employees Retirement Assoc.,
Nos. 28,108/28,109
AL ADMINISTRATIVE LAW
AL-AA Administrative Appeal
AL-LI Legislative Intent
AL-SR Standard of Review
AE APPEAL & ERROR
AE-SR Standard of Review
CP CIVIL PROCEDURE
CP-MO Mootness
CP-MD Motion to Dismiss
EL EMPLOYMENT LAW
EL-HB Health, Pension, and Retirement Benefits
EL-DB Disability
GV GOVERNMENT
GV-PE Public Employees
ST STATUTES
ST-IP Interpretation
ST-LI Legislative Intent
ST-RC Rules of Construction
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