2018-00234332-CU-MC

Rita K. Palo vs. (CalPers)

Nature of Proceeding: Hearing on Demurrer

Filed By: Wakily, Austa

The demurrer of California Public Employees’ Retirement System (“CalPERS”) to the complaint of Rita K. Palo (“Plaintiff”) is sustained with leave to amend.

CalPERS demurrers upon two grounds: (1) the Court has no jurisdiction of the subject matter alleged In the Complaint because Plaintiff failed to exhaust her administrative remedies prior to filing this Complaint Code of Civil Proc. § 430.10(a); and (2) the Complaint is uncertain and ambiguous as to its cause of action against CalPERS Code of Civil Proc. § 430.10(f).

Plaintiff seeks Declaratory Relief to establish CalPERS wrongfully adjusted and reduced disability retirement; that CalPERS wrongfully claims that Plaintiff owes CalPERS money, and has already wrongfully seized and converted to its own account over $3,000 of Plaintiffs justly due retirement payments; CalPERS ignored that Plaintiff’s retirement was not based on age or years of service, but on an industrial accident; Plaintiff is entitled to immediate refund of her money which was wrongfully seized by CalPERS, together with interest; and that Plaintiff is entitled to re-readjustment of her retirement benefits to the amount at which they were being paid prior to CalPERS’ wrongful determination and readjustment, plus incremental

increases thereto.

CalPERS’ primary objection to the Complaint is that Plaintiff did not appeal CalPERS’ determination of her right to retirement benefits to the CalPERS Board prior to filing this action. Plaintiff contends that she did exhaust a formal government claim process in a manner instructed by CalPERS, and that CalPERS’ agent DGS rejected the claim providing her a right to sue. Plaintiff argues that CalPERS never rendered a final decision on her claim, so the regulatory appeal process referenced by CalPERS does not apply. Plaintiff argues that the administrative process referenced by CalPERS would be futile because CalPERS has already decided to not decide her claims.

CalPERS establishes that the Public Employees’ Retirement Law (“PERL”) applies to Plaintiff’s claims, and that established CalPERS to administer the statute and manage pensions for public employees. CalPERS’ Board manages and controls the system (Gov. Code. § 20120) and makes “such rules as it deems proper” (id., § 20121.) The Board “is the sole judge of the conditions under which persons may be admitted to and continue to receive benefits” under the Public Employees’ Retirement Law, (id., § 20125.) The Board has an established administrative remedy process for any benefit of an applicant dissatisfied with a benefit determination (Title 2 Cal. Code Regs. §

555.1). This remedial process is initiated by a Statement of Issues or an Accusation, and a hearing held in accordance with the Administrative Procedure Act (2 Cal. Code Regs, §§ 555.2 and 555.4,) The decision on administrative hearing is a proposed one and is referred to the Board for final determination with the Board adopting the decision, remanding the matter for further evidence or holding its own hearing to determine any question presented to it involving any right, benefit or obligation of a person under the Public Employees’ Retirement Law. (Govt. Code §§11517 and 20134; 2 Cal. Code Regs, § 555,4.)

There is a disconnect between the parties’ arguments. CalPERS argues that Plaintiff must follow one claim, hearing and appeal process to exhaust her administrative remedy. Plaintiff argues that she has done so through a different claim process at CalPERS’ direction and that she otherwise is relieved from following CalPERS’ administrative process. The Complaint as it stands does not alleged that Plaintiff exhausted her administrative remedy available through the PERL regulations. Thus, Plaintiff fails to allege requisite exhaustion, or her Complaint is presently uncertain in that regard.

The demurrer is therefore sustained with leave to amend.