443 P.3d 1264
Utah Ct. App.2019Background
- Nielsen had 20.65 years of vested service credit in the Utah Retirement Systems (URS) before joining the University of Utah in 2013.
- Utah Code § 49-13-204(2)(c) gives a regular full-time employee who begins employment at an institution of higher education on or after May 11, 2010, a one-time irrevocable election to continue participation in the URS Plan if they have prior URS service credit.
- When Nielsen began University employment she did not affirmatively elect URS participation; the University defaulted her into an alternate (non-URS) retirement plan. Nielsen claims a prior URS phone assurance that no affirmative step was required.
- In 2015 Nielsen resigned and was rehired after 36 days and then executed an irrevocable election to rejoin URS; URS later denied entitlement, concluding she had lost her one-time election when she failed to elect upon initial hire in 2013.
- The Utah State Retirement Board granted summary judgment for URS, holding the statute required the election to be made at or shortly after initial employment; Nielsen and the University sought judicial review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nielsen may make the one-time irrevocable election to continue URS participation after initial hire | Nielsen: statute grants a one-time irrevocable election without a time limit; her 2015 election is valid | URS/Board: election had to be made at the time of beginning employment (a short period anchored to hire); default enrollment operates as irrevocable election | Court: statute’s plain language grants the election without a timing restriction; Nielsen’s 2015 election valid |
| Whether a default non-election can operate as the required "election" | Nielsen: a passive/default enrollment is not an affirmative "election" under the statute | URS/Board: failure to elect resulted in irrevocable application of the alternate plan | Court: rejected that a non-election equals the statutory "election"; the right includes an affirmative choice |
| Whether the Board’s statutory interpretation may be sustained to protect tax-qualified status concerns | URS/Board: federal tax/plan qualification concerns justify their interpretation | Nielsen: Board must follow plain statutory language; tax concerns do not override statute | Court: Board must follow statute; concerns about actuarial or tax consequences should be addressed to the Legislature |
| Whether Nielsen was substantially prejudiced by the Board’s error | Nielsen: loss of >$550,000 in retirement benefits if barred from URS accrual | URS: (no contrary prejudice argument prevailed) | Court: loss is substantial prejudice; relief warranted |
Key Cases Cited
- Scott v. Scott, 423 P.3d 1275 (court should follow plain statutory language)
- Truck Ins. Exch. v. Rutherford, 395 P.3d 143 (interpretation of legal terms of art)
- Allred v. Utah State Ret. Board, 914 P.2d 1172 (Board cannot ignore plain statutory language)
- WWC Holding Co. v. Public Service Comm’n, 44 P.3d 714 (substantial prejudice standard)