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Caroline Kingik v. State of Alaska

October 1, 2010

CAROLINE KINGIK, APPELLANT,
v.
STATE OF ALASKA, DEPARTMENT OF ADMINISTRATION,
DIVISION OF RETIREMENT AND BENEFITS
APPELLEE.



Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Jack Smith, Judge. Supreme Court No. S-13431 Superior Court No. 3AN-08-05774 CI

The opinion of the court was delivered by: Christen, Justice.

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, e-mail corrections@appellate.courts.state.ak.us.

OPINION

Before: Carpeneti, Chief Justice, Fabe, Christen, and Stowers, Justices. [Winfree, Justice, not participating.]

I. INTRODUCTION

Caroline Kingik's husband, Morris Welch, was enrolled in the Public Employees' Retirement System (PERS) from 1986 to 1999. Shortly before Welch's retirement, he selected a retirement option that did not include survivor benefits. Kingik consented to this election. Welch died in 2005, and the Division of Retirement and Benefits (the "Division") notified Kingik that she would no longer receive benefits from PERS. Kingik appealed to the superior court, arguing that the Division violated her due process rights and that her waiver of survivor benefits was void. Because the waiver form was clear and because Kingik's waiver of benefits was effective, we affirm.

II. FACTS AND PROCEEDINGS

Morris Welch was employed by the North Slope Borough from 1986 until his retirement in 1999. He married Caroline Kingik in 1989 and was married to her at his death in 2005. By virtue of his employment with the Borough, Welch was eligible for medical and retirement benefits from the State of Alaska through PERS. Between his retirement and death, Welch received $139,992.97 from PERS, $46,041.90 more than his lifetime contributions to the program.

Welch began inquiring about early retirement in early 1998. The Division mailed him information providing estimates of the monthly income he could expect to receive depending on when he decided to retire and which retirement option he selected. The estimates were accompanied by a retirement application packet that included a newsletter entitled "Rights of Spouses and Dependents." The newsletter explained that if the member chose the "normal, early or level income" options and the member's spouse consented, PERS would "pay monthly benefits to the member during his or her lifetime, but [would] not pay monthly benefits to the spouse after the member's death."

Before his retirement, Welch submitted several forms instructing the Division on how he wanted to receive his PERS benefits. The Application for Retirement Benefits form offered Welch five different options for receiving his retirement benefits. Three options included survivor benefits.*fn1 The Level Income Option did not include survivor benefits. The Level Income Option pays members a higher monthly benefit until they reach age sixty-five (when many members begin receiving social security payments), a reduced monthly benefit after age sixty-five, and no survivor benefits. Welch chose the Level Income Option on the Application for Retirement Benefits form, affirmed his choice by signing the Retirement Benefits Election Level Income Option form,*fn2 and expressly declined to request additional information concerning spousal benefits when given the opportunity to do so.

Alaska Statute 39.35.450 requires PERS members to provide their spouse's written consent when they select a retirement option that does not include survivor benefits. The one-page Application for Retirement Benefits form Welch signed shows his selection of the Level Income Option and Kingik's notarized signature consenting to his selection.

Welch was later reminded that he did not select a survivor option. In 1998 Welch sued the North Slope Borough over an ordinance that gave an employment preference to Native Americans. The ordinance was later declared "invalid and unenforceable." As part of the 2005 settlement of the discrimination case, the Borough paid nearly four years of retirement benefits into PERS on Welch's behalf and credited him with four more years of service. During the negotiations to settle the discrimination claim, the Division sent Welch a revised projection of his PERS retirement benefits showing the money the Borough anticipated paying into his PERS account. The Division's letter reminded Welch that he had selected the Level Income Option and that "[f]ailure to choose one of the three survivor options means ALL benefits, including health insurance, will stop when you die" and "Important notice: . . . there are no survivor options with an LIO." (Emphasis in original.)

Neither Welch nor his attorney ever contacted the Division to object or protest his selection of the Level Income Option. Had Welch chosen an option with survivor benefits, he would have received a significantly lower monthly benefit during his lifetime. Instead, Welch received enhanced monthly benefits for the remainder of his life, and never attempted to change his election.

Welch died on October 25, 2005. Kingik contacted the Division to report Welch's death and to inquire about the status of his retirement and medical benefits. On November 17, 2005, the Division notified Kingik that her medical coverage had been terminated and that the October retirement check was the final benefit payable under the PERS program.

Kingik wrote to the Administrator of the Division about her right to receive benefits, but the Administrator upheld the Division's initial denial of benefits. Kingik then appealed to the Office of Administrative Hearings, where the parties filed cross- motions for summary adjudication. The administrative law judge (ALJ) granted the Division's motion, in part. The ALJ ruled that Kingik's waiver of survivor benefits was valid and rejected her argument that the Division had a duty to notify Welch that he had an opportunity to re-designate his retirement benefit when he settled his discrimination claim in 2005 -- the settlement provided no such opportunity. But the ALJ ruled that issues of fact prevented him from deciding as a matter of law what Welch intended when he completed the Application for Retirement Benefits form. After ...


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