Wednesday, June 20, 2018
Court of Appeal:
Pension-Slashing for Convicted Public Employees Is Valid
Epstein Says Former Firefighter Is Entitled to a Hearing to Determine if His Conviction For Gambling Operations Was in Connection With His Employment by County
By a MetNews Staff Writer
The Court of Appeal for this district yesterday upheld the validity of a statute under which the pension of a government employee convicted of a crime in connection with the employment is slashed, but declared that the paring may not occur in the absence of notice and hearing.
Presiding Justice Norman Epstein of Div. Four wrote the opinion. It affirms, as modified, a judgment of retired Los Angeles Superior Court Judge Robert H. O’Brien, sitting on assignment.
The modification is that the Los Angeles County Employees Retirement Association (“LACERA”), rather than the County of Los Angeles, is the entity that must afford due process rights to retired firefighter Tod Hipsher, whose pension was administratively trimmed based on his federal conviction for conducting offshore gambling operations.
LACERA acted pursuant to Government Code §7522.72, a part of the Public Employees’ Pension Reform Act of 2013. Hipsher contends that the statute contravenes provisions of the state Constitution and, in any event, is applicable to him because his crime was not in connection with his employment.
State Contracts Clause
Epstein found no violation of the state constitutional contracts clause. “Not every contractual impairment,” he said, “runs afoul” of that provision.
He agreed with Hipsher that he had a “vested contractual right to certain retirement benefits,” but said those benefits were subject to being withdrawn based on the occurrence of a condition subsequent. The jurist wrote:
“Assuming Hipsher operated the gambling enterprise during the course of his official duties, such conduct constituted a condition subsequent permitting forfeiture of certain service credits pursuant to section 7522.72….There is a strong presumption that section 7522.72 is constitutional….Hipsher fails to make out a clear case, free from reasonable ambiguity, that any contract clause violation occurred.”
Ex Post Facto
Epstein also spurned Hipsher’s contention that the statute is violative of the state constitutional prohibition on ex post facto legislation.
“The prohibition against ex post facto legislation applies almost exclusively to criminal statutes but, in limited circumstances, it can apply to civil legislation,” he said.
It applies where there is the “clearest proof” that a statute, though ostensibly civil in nature, is intended to be punitive, the presiding justice recited. He noted that such a finding would contradict the stated legislative purpose—“to reset overly generous and unsustainable pension formulas for both current and future workers”—and opined that the statute lacked earmarks of a law designed to punish.
“Hipsher fails to demonstrate his case falls within the ‘limited circumstances’ in which the ex post facto clause applies to civil legislation,” Epstein declared.
He did agree with Hipsher, however, that a writ of mandate was properly issued directing that he be afforded the opportunity to contest the LACERA’s assumption that his gambling operations were in connection with his employment.
“At a minimum, Hipsher was entitled to notice of the proposed forfeiture under section 7522.72, along with an opportunity to contest his eligibility for forfeiture before an impartial decision maker,” Epstein said.
In recruiting persons to collect on gambling debts, Hipsher met at a fire station with persons who purported to be motorcycle gang members, but were actually federal agents. He gave them a tour of the station, including a room he used for a portion of his operations.
Epstein pointed out:
“Hipsher’s crime for operating an illegal gambling business…did not, on its face, involve the performance of his official duties. Nor does the statement of facts set forth in Hipsher’s plea agreement reference where he conducted the gambling operation. He admitted the gambling violation but did not admit that it occurred in the performance of his public employment.”
He declared that LACERA “is obligated to afford Hipsher due process protections in accordance with its existing administrative appeal procedures, and consistent with this opinion.”
Epstein set forth the consequence for Hipsher if the pension slashing provision is found applicable to him:
“•Expunging 12 years and nine months of service credits.
“•Expunging $97,060.77 in contributions and $48,183.7 in interest from his retirement fund.
“•Reducing his retirement allowance from $6,843.14 to $2,932.42.
“•Reducing the County’s health care premium subsidy from 100 percent to 68 percent.
“•Voiding the Board of Retirement decision granting him a service-connected disability retirement.”
The case is Hipsher v. Los Angeles County Employees Retirement Association, 2018 S.O.S. 3094.
Attorneys on appeal were Stephen H. Silver and Jacob A. Kalinski of Rains Lucia Stern St. Phalle & Silver, for Hipsher; Steven M. Berliner, Joung H. Yim and Christopher S. Frederick for the county; Steven P. Rice, Johanna M. Fontenot and Michel D. Herrera for LACERA; and Constance L. LeLouis, Deputies Attorney General Constance L. LeLouis and Anthony P. O’Brien for the state.
Copyright 2018, Metropolitan News Company