Kutak Rock attorneys Paige Martin and Michael Sillyman successfully defended the Elected Officials Retirement Plan (“EORP”), a pension system of the State of Arizona, before the Arizona Court of Appeals in Jack Cross v. EORP.
The former EORP Administrator, Jack Cross, purported to retire in 2002. However, he continued as the Plan Administrator for two years while continually collecting his pension. Cross’s pension was incorrectly calculated using bonus, vacation and sick pay. After he retired for the second time in 2004, Cross asked the EORP to recalculate his pension to give him the benefit of a settlement with other plan members. In response, EORP claimed Cross had not ceased to hold office as required by law when he retired in 2002, and thus he was not entitled to collect a pension from 2002 to 2004. EORP then sought to recalculate Cross’s benefits going forward, and stopped Cross’s pension to collect $600,000 in claimed overpayments, determinations which Cross challenged in the superior court. The superior court found Cross retired in June 2002 and held that his retirement benefits should be calculated based on his total salary, including bonuses and payments for unused vacation and sick leave. The court further ruled that if Cross’s benefits were to be reduced, any reduction could only be prospective. It awarded Cross past-due benefits plus interest, attorneys’ fees and costs.
In May 2014, the Arizona Court of Appeals reversed the superior court’s decision, stating Cross had not ceased to hold office when he purported to retire in 2002; bonus, vacation and sick pay were not properly included in the pension calculation; the law did not prevent EORP from correcting the pension; and EORP had the power to adjust the pension by stopping all payments until the overpayment was recouped. The Court of Appeals vacated and remanded to the superior court that portion of its judgment holding the EORP was barred by estoppel from suspending the former administrator’s pension payments to recoup the overpayments, and vacated the attorneys’ fees and costs award to Cross.