ALJDEC decisions subject to certification as final

22F-007-ARB · Arizona State Retirement System · 2022-06-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Theodore Gremmel

Appellant,

Arizona State Retirement System,

Respondent

No. 22F-007-ARB

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: May 16, 2022

APPEARANCES: Theodore Gremmel on his own behalf; Cassie Adams, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On April 8, 2022, the Arizona State Retirement System (“ASRS”) issued a Notice of Hearing setting the above-captioned matter for hearing on May 16, 2022 at the Office of Administrative Hearings in Phoenix, Arizona.

At issue is Appellant Theodore Gremmel’s appeal of ASRS’s determination that his current membership began on December 21, 2013.

Mr. Gremmel first became a member in May 1992, but ASRS’s position is that Mr. Gremmel’s first membership was extinguished on September 28, 2007, when he transferred to the Corrections Officer Retirement Plan (“CORP”) his then existing service time and his purchased military time. Mr. Gremmel asserts that his membership was never extinguished, because he has special status as someone who purchased military service time.

ASRS presented the testimony of member advocate Ryan Guerra.

Mr. Gremmel appeared on his own behalf and he presented the testimony of his wife Kelly Gremmel. Ms. Gremmel is Mr. Gremmel’s beneficiary.

Mr. Gremmel did not testify, but his appeal letters provide his position on the matter.

ASRS’s members’ benefits are dependent on several factors, including the member’s average monthly compensation or AMC.

A member’s AMC is dependent in part on the date his membership began.

As pertinent to this matter, for memberships beginning between January 1, 1984 and June 30, 2011, the AMC is based on “the monthly average of compensation on which contributions were remitted during a period of thirty-six consecutive months during which a member receives the highest compensation within the last one hundred twenty months of credited service.” Whereas for memberships beginning on or after July 1, 2011, that average is based on a period of sixty months. Ariz. Rev. Stat. § 38-711(5)(b) and (5)(c).

Mr. Gremmel referred to memberships using an average based on 36 months as “Addendum B Memberships,” and those using an average based on 60 months as “Addendum C Memberships,” which is not terminology ASRS uses.

Mr. Gremmel first became a member of ASRS in May 1992.

Mr. Gremmel purchased four years of military service time through payroll deductions he authorized on January 4, 2000.

On September 28, 2007, Mr. Gremmel transferred all of his existing ASRS service time (15.17 years) and his purchased military service time (four years) to CORP.

As a result of his transfer to CORP, Mr. Gremmel’s then existing ASRS membership rights were extinguished.

Mr. Gremmel enrolled in ASRS for a second time on December 9, 2013 and his second membership began on December 21, 2013, the date on which ASRS received from his new employer his first contribution. Prior to December 21, 2013, ASRS had last received a contribution for Mr. Gremmel on June 30, 2007, which was before he transferred from ASRS to CORP.

According to Mr. Gremmel, in November 2013, he was considering retiring from his position with Pinal County, through which he was a member of CORP, to take another position that would have ASRS membership, and he was being cautious because he knew that there had been changes to the law regarding retirement benefits.

According to Mr. Gremmel, he therefore made several phone calls to ASRS during November 2013 expressing his concerns about “whether or not I would be able to return to ASRS as an ‘Addendum B Member,’” and that various people assured him that he would be an “Addendum B Member” because his membership began in 1992. According to Mr. Gremmel, it was based on this advice that he retired from his existing job (and CORP) and took a position with an ASRS employer. ASRS Exhibit 10.

ASRS customer service representatives are trained to make log all calls, except those that are seeking only general advice. ASRS has no record of calls from Mr. Gremmel in November 2013. Because ASRS has no record of calls from Mr. Gremmel, it had no way to check whether he did receive bad advice in November 2013.

ASRS concedes however that its software has a deficiency in that for members such as Mr. Gremmel whose accounts are extinguished and who later rejoin ASRS, the software will show the member’s original membership date rather than the date the member rejoined ASRS. A manual audit of a member’s account is required for this deficiency to come to light for any given member. Manual audits are typically only performed when a member is actually retiring or otherwise exiting ASRS, but ASRS will also perform a manual audit if it is alerted of the need to perform one.

Consequently, ASRS concedes that had Mr. Gremmel called ASRS in November 2013, it is likely that he would have been told that his membership date was effective in 1992.

When ASRS learns that of a member who has had an account extinguished and then rejoined ASRS, it disables online access for that member, which includes Mr. Gremmel. ASRS provides these members with information by telephone and hard-copy as requested. The reason for disabling online access is to avoid having members receiving erroneous information. ASRS intends to implement a system-wide fix for the problem, but given the relatively few members affected it has not found it appropriate to spend the money necessary to do so.

After beginning his second ASRS membership, Mr. Gremmel became aware that ASRS was still showing that he had four years of purchased military service and he contacted ASRS in an effort to have that information removed so he could get an accurate count of his years of service. At that time Mr. Gremmel’s account was showing his membership start date as being in 1992.

In or about August 2021, Mr. Gremmel noticed that at some point his statements began to show that his membership started in 2013, not 1992 as had previously been the case. According the Mr. Gremmel, this change was made in error and, through his September 15, 2021 appeal letter, he requested that ASRS correct the error and change his account to show that his membership began in 1992.

In his appeal letter of September 15, 2021, Mr. Gremmel acknowledged that as of August 12, 2021 his account accurately showed that he had 6.10 years of service.

ASRS’s position is that it is required by statute to correct all errors to ensure that members receive no more and no less than they are entitled to receive.

Mr. Gremmel’s position is that his membership began in 1992. He advances two rationales: (1) that he has special status as a veteran who purchased service time, although he effectively acknowledges that there is no statute providing such special status; and/or (2) because ASRS erred in November 2013 when it told him that his membership began in 1992, ASRS is required to correct that error by using 1992 when calculating his benefits.

Mr. Gremmel also asserts that his ASRS membership was never closed, either because he has special status through his purchase of military time, or for some other reason, perhaps related to the reason his purchased military service time was not removed from his account. In support of his position that his original account was never closed, he notes that he has had only one account number.

CONCLUSIONS OF LAW

Mr. Gremmel bears the burden of proof to show that ASRS erred when it denied his request to change its records to show that his membership began in 1992. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014).

The primary goal when construing statutes is to fulfill the intent of the legislature. Backus v. State of Arizona, 220 Ariz. 101, 203 P.3d 499 (2009).

An agency’s authority is limited to that which is found in its enabling legislation. Arizona State Board of Regents v. Arizona State Personnel Board, 195 Ariz. 173, 985 P.2d 1032 (1999).

Substantial evidence is evidence that a reasonable mind would use to reach a conclusion. See Mealey v. Arndt, 206 Ariz. 218, 76 P.3d 892 (App. 2003).

An ASRS membership begins simultaneously with contributions to the System. Ariz. Rev. Stat. § 38-736.

If an ASRS member elects to transfer to another defined benefit retirement plan, his ASRS benefits terminate on the date of that transfer. Ariz. Rev. Stat. § 38-750(F).

When a member transfers from one retirement plan to another plan, the member's rights in the retirement plan from which he is transferring are extinguished on completion of his transfer. Ariz. Rev. Stat. § 38-922(E).

ASRS is required to correct errors in its records to ensure that the member or beneficiary receives no more or no less than they would have been entitled to receive if no error had occurred. Ariz. Rev. Stat. § 38-765.

The preponderance of the evidence shows that Mr. Gremmel’s then existing ASRS membership rights were extinguished and his then existing membership benefits were terminated on September 28, 2007 when he transferred from ASRS to CORP.

Although ASRS’s records were in error in that these records were showing Mr. Gremmel’s membership began in 1992, ASRS was required by statute to correct those records to ensure that Mr. Gremmel receives no more or no less than the benefit he is entitled to, which correction was properly made when ASRS changed Mr. Gremmel’s records to show that his current membership began on December 21, 2013.

Mr. Gremmel’s assertion that he received assurances that he would be an “Addendum B Member” if he rejoined ASRS, is not substantial evidence because that assertion was not made while under oath or affirmation, he did not identify who made those assurances or the date on which the assurances were made, and his written statements attribute to ASRS terminology that ASRS does not use. But even if these assurances were made, ASRS was obligated to correct its records to show that his current membership began on December 21, 2013.

Because Mr. Gremmel has not shown that ASRS erred when it determined that his current membership began on December 21, 2013, his appeal should be dismissed.

ORDER

IT IS ORDERED that Theodore Gremmel’s appeal is dismissed.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order is five days after the date of that certification.

-54864001

001

-137160-45720000Done this day, June 23, 2022.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Paul Matson, Director

Arizona State Retirement System

-54864001

001

-137160-45720000By Miranda Alvarez

Legal Secretary