Opinion
No. COA18-921
05-21-2019
JAMES A. LAYTON, Plaintiff, v. DEPARTMENT OF STATE TREASURER and BOARD OF TRUSTEES OF TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, Defendants.
Hicks McDonald Noecker, LLP, by David W. McDonald, for the Plaintiff. Attorney General Joshua H. Stein, by Special Deputy Attorney General Joseph A. Newsome, for the Defendants.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. Davidson County, No. 13 CVS 1739 Appeal by Plaintiff from order entered 2 April 2018 by Judge Vance Bradford Long in Davidson County Superior Court. Heard in the Court of Appeals 27 March 2019. Hicks McDonald Noecker, LLP, by David W. McDonald, for the Plaintiff. Attorney General Joshua H. Stein, by Special Deputy Attorney General Joseph A. Newsome, for the Defendants. DILLON, Judge.
Plaintiff James A. Layton appeals from an order affirming a decision of the Board of Trustees of the Retirement System that denied him long-term disability benefits.
I. Background
Mr. Layton was an employee of the State of North Carolina in the Department of Environment and Natural Resources. As an employee of the State of North Carolina, Mr. Layton was a member of Defendant Teachers' and State Employees' Retirement System ("TSERS").
On 20 January 2006, Mr. Layton was discharged from the Department of Environment and Natural Resources because he was unable to follow instructions. Mr. Layton's failure to follow instructions was attributed to his obsessive-compulsive disorder.
After his discharge, Mr. Layton applied for and retroactively received short-term disability benefits, beginning in July 2011.
In August 2011, Mr. Layton sent an email to Defendant Department of State Treasurer (the "State Treasurer") regarding his eligibility to apply for long-term disability benefits. In September 2011, the State Treasurer responded to Mr. Layton, informing him that he was "not eligible for Long-Term disability benefits from the [Disability Income Plan of North Carolina]" because he did not comply with the statutory filing requirement as provided in N.C. Gen. Stat. § 135-106. The denial of Mr. Layton's long-term disability benefits was subsequently affirmed by the Office of Administrative Hearings and the Board of Trustees of TSERS.
In July 2013, Mr. Layton filed a complaint, seeking a declaratory judgment that Section 135-106 violates the due process and equal protection guarantees of both the North Carolina and United States constitutions.
The trial court treated Mr. Layton's complaint as a petition for judicial review. And on 2 April 2018, the trial court issued an order upholding the constitutionality of Section 135-106 and, in turn, the denial of Mr. Layton's request for long-term disability benefits. Mr. Layton timely appealed to our Court.
II. Analysis
In his appeal, Mr. Layton argues that the 180-day application period set forth in Section 135-106 is unconstitutional on the basis that it violates his equal protection and due process rights under both our federal and state constitutions. Specifically, Mr. Layton argues that the statute "is irrational and is contrary to any legitimate purpose[.]" In so arguing, he contends that non-mutual offensive collateral estoppel may be used to support his case and, therefore, that the trial court erred in declining to apply the doctrine of non-mutual offensive collateral estoppel.
We review alleged violations of constitutional rights de novo. Piedmont Triad Airport Auth. v. Urbine, 354 N.C. 336, 338, 554 S.E.2d 331, 332 (2001). Likewise, we review questions of law, such as a trial court's decision to apply collateral estoppel, de novo. Bluebird Corp. v. Aubin, 188 N.C. App 671, 678, 657 S.E.2d 55, 61 (2008).
Section 135-106 of our General Statutes governs long-term disability benefits. This statute provides, in pertinent part, that:
[A]ny beneficiary or participant who has had five or more years of membership service may receive long-term disability benefits from the Plan upon approval by the Board of Trustees, commencing on the first day succeeding the conclusion of the short-term disability period provided for in G.S. 135-105, provided the beneficiary or participant makes application for such benefit within 180 days after the short-term disability period ceases[.]N.C. Gen. Stat. § 135-106(a) (2007) (emphasis added).
. . .
The Board of Trustees may extend this 180-day filing requirement upon receipt of clear and convincing evidence that application was delayed through no fault of the disabled beneficiary or participant and was delayed due to the employers' miscalculation of the end of the 180-day filing period. However, in no instance shall the filing period be extended beyond an additional 180 days.
Essentially, upon the onset of disability or the termination of an employee due to disability, there is a "waiting period" of sixty (60) continuous calendar days. N.C. Gen. Stat. § 135-104 (2006). Following the "waiting period," a terminated employee may apply for and receive short-term disability benefits for a maximum period of one year. N.C. Gen. Stat. § 135-105 (2006). The day after short-term disability benefits cease, a one-hundred eighty (180) day window opens for the terminated employee to apply for long-term disability benefits. N.C. Gen. Stat. § 135-106 (2006). This 180-day window may be extended, but only for another 180 days. Id.
Whether this statute's timeframe is constitutional turns on whether it meets minimum scrutiny by bearing any reasonable relationship to or furthering some legitimate state interest. See Duggins v. N.C. State Bd. of Certified Pub. Accountant Exam'rs., 294 N.C. 120, 131, 240 S.E.2d 406, 413 (1978).
Disabled persons are not a suspect or quasi-suspect class, and therefore not subject to intermediate or strict scrutiny. See City of Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432, 442 (1985).
In its brief, TSERS and the State Treasurer assert several reasons and bases for the time limit. For instance, they point out that the time limit is in place to ensure the award of disability benefits is accurate and service-related. See N.C. Gen. Stat. § 135-106(a) (2006) (noting "the requirement that the incapacity was incurred at the time of active employment" or, in the alternative, that the participant "becomes disabled while on an employer approved leave of absence"). They point out that the time limit also conserves public funds and limits the future financial obligations of the Disability Income Plan of North Carolina ("DIPNC"). See id. (permitting the Board of Trustees to require beneficiaries to submit to annual medical reviews in order to ensure the need of disability benefits and, in turn, terminate the benefits of those no longer disabled); see also N.C. Gen. Stat. § 135-110 (2006) (regarding the funding and management of the DIPNC). We conclude that these government interests are legitimate; they are rationally related to the time limit set forth in Section 135-106. N.C. Gen. Stat. § 135-106 (2006). Therefore, we hold that Section 135-106 does not violate the equal protection or due process clauses of the United States and North Carolina constitutions.
Our Court has recently upheld a time limit on applying to receive death benefits under the workers' compensation statutory scheme in light of the statute's policy to "provid[e] death benefits, at a fixed rate for a fixed period, to the individual dependents of an employee who has met with an untimely and unexpected demise" and the understanding that "it was never contemplated that the Workers' Compensation Act would . . . be the equivalent of general accident, health or life insurance." See Coffey v. Weyerhaeuser Co., 218 N.C. App. 297, 303, 720 S.E.2d 789, 883 (2012) (quoting Deese v. Lawn and Tree Expert Co., 306 N.C. 275, 281-82, 293 S.E.2d 140, 145 (1982)).
We note Mr. Layton's citation to a recent case in Guilford County, in which the trial court ruled that the time limit to apply for long-term disability benefits, as set out in Section 135-106, was unconstitutional. Hemphill v. Dep't of State Treasurer, 13 CVS 4330. Thereby, Mr. Layton seeks to utilize the doctrine of non-mutual offensive collateral estoppel. That is, though Mr. Layton was not a party nor in privity with a party in the Guilford case, he argues that the State Treasurer should be bound here by the determination made against it in that case.
To establish collateral estoppel, the following elements must be met: "(1) a prior suit resulting in a final judgment on the merits; (2) identical issues involved; (3) the issue was actually litigated in the prior suit and necessary to the judgment; and (4) the issue was actually determined." McDonald v. Skeen, 152 N.C. App. 228, 230, 567 S.E.2d 209, 211 (2002) (citing Thomas M. McInnis & Associates, Inc. v. Hall, 318 N.C. 421, 429, 349 S.E.2d 552, 557 (1986)). While North Carolina recognizes and "allows a non-mutual party to assert offensive collateral estoppel, we . . . [must] consider whether it would be inequitable to allow [Mr. Layton] to do so under the facts of this case." Rymer v. Estate of Sorrells, 127 N.C. App. 266, 269, 488 S.E.2d 838, 840 (1997).
Here, the elements of collateral estoppel are not met. Indeed, the Hemphill case resulted in a final judgment regarding the constitutionality of Section 135-106. McDonald, 152 N.C. App. at 230, 567 S.E.2d at 211. However, the judgment in Hemphill was entered based on procedural and standing grounds, not on the merits. More specifically, in Hemphill, TSERS defended against the suit by raising arguments regarding its sovereign immunity and not being subject to suit as a "person" under Section 1983 as well Hemphill not naming an individual defendant, failing to exhaust administrative remedies, and having alternate adequate state remedies. A review of the Hemphill record reveals that the merits, the constitutionality of Section 135-106, were not argued. TSERS did not "actually litigate[]" the central issue of Section 135-106's constitutionality. McDonald, 152 N.C. App. at 230, 567 S.E.2d at 211. Since the elements of collateral estoppel are not met in the case at hand, the trial court did not err in refusing to use the doctrine of non-mutual offensive collateral estoppel.
III. Conclusion
The trial court did not err in finding Section 135-106 and its time frame for applying for long-term disability benefits constitutional, as TSERS set forth several justifications for the time limit which meet minimum scrutiny. Likewise, the trial court did not err in refusing to use non-mutual offensive collateral estoppel when the ultimate issue of the case was not actually litigated in the cited prior suit.
AFFIRMED.
Judges BRYANT and ARROWOOD concur.
Report per Rule 30(e).