In a case that could have ramifications for many public employee retirees, a Marion County Circuit Court jury has unanimously found the Oregon Public Employee Retirement System Board of Directors liable for over $200,000 in damages for negligent misrepresentations made to a PERS member regarding her retirement.

Kay Bell was a schoolteacher, counselor and a member of the Oregon Education Association. Her lawsuit, Kay Bell v. Public Employees Retirement Board, was decided on July 16. PERS Coalition attorney Aruna Masih, of the Bennett Hartman legal firm, represented Bell at the trial.

Prior to the trial, Marion County Circuit Court Judge Claudia Burton found that the PERS Board owes a "special duty of care" to PERS members to protect them from economic loss caused by false information or other material misrepresentation made by PERS. Trial evidence established that, in this case, PERS had provided Bell incorrect information on annual statements and estimates over a period of many years. Bell resigned her position and retired in reliance on that incorrect information.

Months after Bell retired, PERS revealed that the information it had provided her was inaccurate by over $1,100 per month.

"Of course, by this point, Bell's former position had already been filled, and she had lost the seniority she had accrued," said Masih. "She testified that had PERS provided her accurate information in a timely manner, she would never have resigned her position and would have continued working."

  
The jury unanimously found that Bell reasonably relied on the false information provided by PERS and that she suffered loss of salary and benefits of $200,707.04 as a result of giving up her job in reliance on that information. The PERS Board has already notified the trial court of its intent to challenge the $200,707.04 jury verdict as exceeding the caps set by the Oregon Tort Claims Act. Then, once the tort claims cap issue is decided by the trial judge and a judgment is entered, Masih says the case will likely also be appealed by the PERS Board.

 
But PERS Coalition lead attorney Greg Hartman says such an appeal is not necessarily a bad thing.

"The appeal will give the Oregon appellate courts not only the opportunity to set precedent on whether the PERS Board owes a special duty of care to PERS members to provide them accurate information, but also whether the Tort Claims Act should limit damages between a fiduciary and beneficiary like the PERS Board and PERS members," says Hartman. "The jury verdict can also be used to support legislative and administrative reform of the PERS retirement audit process, requiring PERS to perform such an audit before a member retires to allow both the member and PERS sufficient time to challenge the accuracy of the information before retirement."

It is likely Bell is not the only person who retired under these circumstances, and the Bell case could well be a precedent for further rulings once a final decision is reached following appeals. In the meantime, Hartman and the PERS Coalition partners — of which AFSCME is a leading and longtime member — will discuss possible legislative reform proposals at the next PERS Coalition meeting in September.