Justices find Fund liable to pay retiree’s disability benefits

The CNMI Supreme Court has affirmed the Superior Court’s determination that the NMI Retirement Fund is liable to pay retiree Michael P. Cody his disability retirement annuity in the amount of 66 2/3 percent of his salary.

In agreeing with Superior Court associate judge David A. Wiseman’s ruling, the high court ruled that Cody, who was a Fund member prior to enactment of Public Law 13-60, should receive disability benefits in the amount of 66 2/3 percent of his salary at the time he became disabled.

P.L. 13-60 required that a disability applicant get a written certification by two licensed physicians and a vocational rehabilitation counselor.

The high court, in its opinion issued Thursday, also vacated for lack of subject matter jurisdiction Wiseman’s conclusion that the increased contribution rate is not a substantial impairment of the contractual relationship between the Fund and Cody.

The high tribunal vacated a portion of Wiseman’s order that adjudicated the constitutionality of the increased contribution rate contained in Public Law 6-17. The Legislature enacted P.L. 6-17 in 1989, creating two classes of Fund members: “Class I” members, defined as persons who became members of the Fund after the enactment of the law, and “Class II” members, those who were members of the Fund prior to the enactment of the law. The law allowed Class I members to continue to contribute only 6 percent of their annual salary to the Fund but required Class II members to contribute 9 percent of their salary.

Associate Justice John A. Manglona penned the high court’s opinion. Acting chief justice Alexandro C. Castro concurred. Then chief justice Miguel S. Demapan was present during oral argument but retired prior to the issuance of the opinion.

Cody, through the Northern Marianas Protection and Advocacy Systems Inc., sued the Fund, claiming that he is entitled to a disability retirement annuity from the Fund starting Dec. 31, 2007.

NMPASI counsel Jeanne Rayphand said that Cody is owed 66 2/3 percent of the salary he was receiving at the time of his separation from employment, or $40,531.

Cody was employed in March 1989 as a civil service employee of the CNMI. He is a Class II member of the Fund because he was a Fund member prior to May 7, 1989, and did not elect to become a Class I member.

In July 2007, the Fund administrator denied Cody’s applications for disability retirement. Cody appealed and later sued the Fund after no decision was made on his appeal.

The Fund, through then counsel James Hollman, argued that Cody is a Class I member who has failed to meet the requirements for receiving disability.

In June 2010, Wiseman issued a ruling favorable to Cody.

Cody, however, through counsel Rayphand, appealed to the CNMI Supreme Court Wiseman’s conclusion that section 8441 of P.L. 6-17, which provided that “Class II” members of the Fund must contribute 9 percent of their salary to the Fund, was not a substantial impairment of contract.

The Fund, through counsel Carolyn M. Kern, argued on cross-appeal that Wiseman erred when he awarded Cody a disability retirement annuity of 66 and two-thirds percent of his salary. Kern asserted that Cody was only entitled to a disability retirement annuity of 50 percent pursuant to Public Law 13-60.

The justices declined to consider the constitutionality of P.L. 6-17 because they held that Cody has no standing to challenge that law.

The justices vacated the portion of Wiseman’s order that adjudicated the constitutionality of the increased contribution rate contained in P.L. 6-17. The justices said the issue must await a challenge by a party with proper standing.

As to P.L. 13-60, the justices held that the 50 percent disability retirement annuity contained in that law is not retroactive, and is only applicable to persons who were not yet members of the Fund on the date the law was enacted.

The justices said that persons who were members of the Fund prior to the enactment of P.L. 13-60 are entitled to a 66 2/3 percent disability retirement annuity.