Maryland State Retirement & Pension Systems v. Martin

WENNER, Judge. . The Board of Trustees of the Maryland State Retirement & Pension Systems determined that David K. Martin, appellee, could not revoke his transfer from the Employees’ Retirement System of the State of Maryland (retirement system) to-the Pension System for Employees of the State of Maryland (pension system), and denied his request for reinstatement into the retirement system. Upset by that turn of events, Martin appealed to the Circuit Court for Garrett County which reversed the decision of the Board. Upon this appeal, the Board contends that: (1) The circuit court exceeded its statutory authority by ruling upon issues never addressed at the agency level; (2) The circuit court erred in holding that the agency failed to consider admissible evidence; and (3) The agency’s decision must be affirmed because it is supported by substantial evidence.

We shall reverse the judgment of the circuit court. A brief explanation of the retirement plans for employees of the State of Maryland is necessary to place the issues which we are called upon to decide in their proper context. Prior to January 1, 1980, the retirement system constituted the only retirement plan for most State employees. Md. Ann.Code art. 73B § 2 (1983 Repl.Vol.).

On January 1,1980 Article 73B was amended to establish a second system of retirement, the pension system. § 112. The two systems are identical in two respects relevant to this appeal. First, any member of either system may retire after thirty years of creditable service. §§ 11(1), ll(3)(b) and 117(l)(a). Second, elected and appointed officials may retire under both systems after 16 years of creditable service. §§ 11(12) and 117(13).

The two systems differ, however, with respect to employee contributions and benefits. Members of the Re ²⁴³ tirement system contribute 5 to 7 percent of their salaries to their retirement accounts, whereas members of the pension system ordinarily make no contributions to their retirement accounts. §§ 11C(5), 11D(5) and 122. Upon retirement after both sixteen and thirty years, members of the retirement system receive benefits which are generally 50% greater than those received by members of the pension system. §§ 11(3) and 117(2). As of January 1, 1980, Article 73B § 3(8) gives employees who were members of the retirement system as of that date the option of choosing to remain in the retirement system, or of transferring to the pension system, and establishes the procedure for transfers.

Specifically, the statute provides that: Any person who is a member of the retirement system ... on December 31, 1979, shall continue to be a member unless on January 1, 1980 or the first day of any month thereafter he becomes a member of The Pension System for Employees of the State of Maryland by filing with the board of trustees, at least 90 days before, on the form the board requires an executed waiver of all benefits which might inure to him under this retirement system. Appellee has been a Deputy Clerk of the Circuit Court for Garrett County since July, 1977. Until July of 1984, he was a member of the retirement system. On or about July 24, 1984, he executed the waiver required by Art. 73B § 3(8) 1 and transferred to the pension system.

Accordingly, appellee received a refund of his contributions, and ceased contributing a percentage of his salary to his retirement account. On October 5, 1984, appellee requested reinstate ²⁴⁴ ment into the retirement system. On November 7, 1984, the agency denied his request on the grounds that his transfer to the pension system was irrevocable. Appellee requested a hearing which was held on September 9, 1985.

The agency’s hearing officer denied appellee’s request for reinstatement, and the Board adopted the hearing officer’s decision. As we have noted, the Circuit Court for Garrett County reversed the Board’s decision. I. Appeals from the Board of Trustees of the Maryland State Retirement and Pension Systems ¿re governed by The Administrative Procedure Act, Md.State Gov’t.Code Ann. § 10-101 et. seq. (1984).

Under § 10-215(g)(3) the circuit court may: reverse or modify the [agency’s] decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision of the agency: (i) is unconstitutional; (ii) exceeds the statutory jurisdiction of the agency; (iii) results from an unlawful procedure; (iv) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or (vi) is arbitrary or capricious. As can be seen, the scope of review is narrow. Secretary of Health & Mental Hygiene v. Crowder, 43 Md.App. 276 , 405 A.2d 279 , cert. denied, 286 Md. 745 (1979). “The court’s statutory role upon review goes very little beyond its inherent power of review to prevent illegal, unreasonable, arbitrary or capricious administrative action.” Harford Memorial Hospital v. Health Services Cost Review Commission, 44 Md.App. 489, 506 , 410 A.2d 22 (1980); Chertkof v. Dept. of Natural Resources, 43 Md.App. 10, 17 , 402 A.2d 1315 , cert. denied, 286 Md. 745 (1979). Where the agency has made no error of law, then, the standard of review is “whether the finding is supported by ²⁴⁵ substantial evidence.” Nationwide Mutual Insurance Co. v. Insurance Commissioner, 67 Md.App. 727, 737 , 509 A.2d 719 (1986).

In Bulluck v. Pelham Wood Apts., 283 Md. 505 , 390 A.2d 1119 (1978), the Court of Appeals discussed this standard, as well as other principles concerning judicial review of agency decisions: “Substantial evidence,” as the test for reviewing factual findings of administrative agencies, has been defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” The scope of review “is limited ‘to whether a reasoning mind reasonably could have reached the factual conclusion the agency reached,’ ”____ In applying the substantial evidence test, we have emphasized that a “court should [not] substitute its judgment for the expertise of those persons who constitute the administrative agency from which the appeal is taken.” We also must review the agency’s decision in the light most favorable to the agency, since “decisions of administrative agencies are prima facie correct,” and “carry with them the presumption of validity.” Furthermore, not only is it the province of the agency to resolve conflicting evidence, but where inconsistent inferences from the same evidence can be drawn, it is for the agency to draw the inferences. (Citations omitted). (Emphasis in original). Bulluck, 283 Md. at 512-13 , 390 A.2d 1119 .

Particularly relevant to the case sub judice is the rule that “in reviewing decisions of administrative agencies, the court’s appraisal or evaluation must be of the agency’s fact-finding results and not an independent original estimate of or decision on the evidence, and that the required process requires restrained and disciplined judicial judgment so as not to interfere with the agency’s factual conclusion where supported by evidence.” Zeitschel v. Board of Education of Carroll County, 274 Md. 69, 82 , 332 A.2d 906 (1975). Thus, even though a reviewing court may disagree with the conclusions drawn by an agency, it is ²⁴⁶ not at liberty to disregard the agency’s conclusions and substitute its own. Nelson v. Real Estate Commission, 35 Md.App. 334, 344-45 , 370 A.2d 608 , cert. denied, 280 Md. 733 (1977). Moreover, a reviewing court is restricted to the record made before the administrative agency, and is confined to whether, based upon the record, a reasoning mind reasonably could have reached the factual conclusion reached by the agency.

Cicala v. Disability Review Board for Prince George’s County, 288 Md. 254, 260 , 418 A.2d 205 (1980). Accord, Ad & Soil, Inc. v. County Commissioners of Queen Anne’s County, 307 Md. 307, 321 , 513 A.2d 893 (1986) (Circuit court’s review of an administrative agency decision is ordinarily restricted to evidence in the record developed before the agency); Prince George’s Doctors’ Hospital, Inc. v. Health Services Cost Review Commission, 302 Md. 193, 202-203 , 486 A.2d 744 (1985) (Judicial review must not be either judicial fact-finding or a substitution of judicial judgment for agency judgment); Chertkof, supra, 43 Md.App. at 17, 402 A.2d 1315 (Judicial review, particularly in appeals from administrative bodies, must be limited to the determination based on the record) (emphasis in original); Club 99, Inc. v. District of Columbia Alcoholic Beverage Control Board, 457 A.2d 773 (D.C.App.1982) (Administrative agency decision must stand or fall on basis used by the agency); Love v. Hidalgo, 508 F.Supp. 177, 181 , (D.Md.1981) (Proper focus of reviewing court is on reasons given by administrative authority). We believe the trial judge violated the principles of judicial review which we have just restated. The circuit court reversed the agency’s decision because “there was no information available on the Application to Transfer for the Appellant to make an informed decision.” 2 Specifically, the circuit court concluded that the “Application to Transfer” ²⁴⁷ form: (1) was not a valid contract; (2) contained negligent misrepresentations; and (3) failed to give sufficient notice of its irrevocability.

In reaching these conclusions, the trial judge raised, developed and ruled upon issues not presented by the parties or considered by the agency. Moreover, in order to substantiate its conclusions, the trial court engaged in independent fact-finding. This it may not do. At the hearing before the agency, appellee argued that he transferred to the pension system solely in reliance on misinformation he received from an agency retirement counselor.

He claimed that he had identified himself as a deputy clerk in his telephone conversation with the agency retirement counselor, and that the counselor nonetheless failed to inform him of his sixteen-year retirement option. 3 Thus, he contended, the agency should be estopped from denying his request for reinstatement into the retirement system. The hearing officer denied appellee’s request for reinstatement. He concluded that there was no evidence that appellee had been misinformed by the retirement counselor, and that there was no evidence that appellee informed the retirement counselor that he was an appointed official. The Board agreed.

Before the circuit court, appellee again argued that the agency should be estopped from denying him reinstatement. He also claimed that the hearing officer erred in failing to consider his testimony wherein he said that he had identified himself as an appointed official. 4 ²⁴⁸ It is clear from the transcript that neither of the parties raised issues concerning the contractual validity of the “Application to Transfer" form in the proceedings before the agency. The circuit court raised these issues on its own initiative. The circuit court also made several independent factual findings.

For example, the circuit court found that the transfer form described the differences between the two retirement systems only as they apply to regular employees. The court also made several findings regarding