Kayla Vaughn v. Public Employees' Retirement System of Mississippi
182 So. 3d 433
| Miss. | 2015Background
- Marjorie Kahn, a PERS member, elected Option 4-B for disability retirement on October 11, 1999, which guaranteed reduced lifetime payments and a fixed years-certain guarantee; if the retiree and last beneficiary died before all guaranteed payments were made, the actuarial equivalent of remaining payments would be paid to the retiree’s estate as intestate property.
- Marjorie died in January 2000; PERS began paying monthly benefits to her named beneficiary, daughter Heather Vaughn, guaranteed through October 2019.
- The Legislature amended Section 25-11-115 and enacted Section 25-11-117.1 effective July 1, 2000 (after Marjorie’s death), changing the disposition rules for remaining payments to specify statutory successors in descending order.
- Heather died in August 2011; PERS calculated the actuarial equivalent of remaining guaranteed payments (~$110,163) and planned to distribute it to Marjorie’s statutory successors under §25-11-117.1(1).
- Heather’s half-sister Kayla Vaughn (not related to Marjorie) claimed the funds should instead go to Heather’s statutory successors under §25-11-117.1(2). PERS denied the claim; the Claims Committee and PERS Board agreed with PERS.
- The Hinds County Circuit Court and the Court of Appeals affirmed. The Mississippi Supreme Court granted certiorari to decide whether the pre-2000 statute governing Marjorie’s election controlled and whether PERS properly applied §25-11-117.1.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statutory version governs distribution of remaining payments when retiree elected Option 4-B before 2000 amendments? | Vaughn: Post-2000 statutes control; remaining funds should go to Heather’s successors under §25-11-117.1(2). | PERS: Marjorie’s pre-2000 election controls; remaining funds go to Marjorie’s estate/heirs. | Court: Pre-2000 law in effect when Marjorie elected controls because contract rights cannot be impaired by later statutes. |
| Did application of §25-11-117.1 by PERS and lower courts violate contract clauses by impairing Marjorie’s contractual rights? | Vaughn: Statutory change does not impair contract or Marjorie’s intent is unclear. | PERS: Applying §25-11-117.1 yields valid distribution to Marjorie’s statutory successors. | Court: Legislature would have impaired Marjorie’s contract; using amended statute was error. |
| Was PERS’s distribution decision (pay Marjorie’s statutory successors) correct in result? | Vaughn: Funds belong to Heather’s heirs, not Marjorie’s heirs. | PERS: Funds should go to Marjorie’s statutory successors; interpretation supported by statute’s language. | Court: Although wrong statute was applied, result is affirmed as harmless error because distributions under pre-2000 intestacy rules and §25-11-117.1(1) are substantially similar in this case. |
| Should the Court resolve the proper construction of §25-11-117.1 generally? | Vaughn: Court should interpret §25-11-117.1 to support her claim. | PERS: Court may defer to PERS interpretation. | Court: Declined broad interpretation; made no general pronouncement and limited decision to this case. |
Key Cases Cited
- Pub. Emp.'s Ret. Sys. v. Porter, 763 So. 2d 845 (Miss. 2000) (explains state and federal contract-clause protections and when legislative changes to retirement benefits may be constitutional)