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
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
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.