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Stalnaker v. M.L.D. (6/6/97), 939 P 2d 407
<![CDATA[
NOTICE: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring errors to
the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501; (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
ROBERT STALNAKER, )
Administrator of the Public ) Supreme Court Nos. S-7289/7309
Employees' Retirement System, )
) Superior Court No.
Appellant and ) 3AN-93-9251 CI
Cross-Appellee, )
) O P I N I O N
v. )
) [No. 4826 - June 6, 1997]
M.L.D., )
)
Appellee and )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Joan M. Woodward, Judge.
Appearances: John B. Gaguine, Assistant
Attorney General, and Bruce M. Botelho, Attorney General, Juneau,
for Appellant and Cross-Appellee. Christine S. Schleuss,
Anchorage, for Appellee and Cross-Appellant.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, and Fabe, Justices. [Eastaugh, Justice, not
participating.]
FABE, Justice.
I. INTRODUCTION
Following his termination as the police chief of the City
of King Cove, M.L.D. applied for occupational disability benefits
under the Public Employees' Retirement System (PERS). Robert
Stalnaker, the PERS administrator, denied M.L.D.'s application for
occupational benefits, finding that his disability was not
occupational within the meaning of the PERS statutes. Stalnaker,
however, appointed M.L.D. to nonoccupational disability benefits.
The Public Employees' Retirement Board (PERB) affirmed
Stalnaker's decision to deny occupational disability benefits on
the alternative ground that M.L.D.'s employment was not terminated
"because of"an occupational disability. Stalnaker then suspended
M.L.D.'s nonoccupational disability benefits because those benefits
also require that the person be terminated "because of"a
disability. The PERB affirmed this decision as well.
M.L.D. appealed both decisions of the PERB to the
superior court, which affirmed the denial of occupational
disability benefits but reversed the PERB's decision to rescind
M.L.D.'s nonoccupational disability benefits. Both M.L.D. and
Stalnaker appeal.
II. FACTS AND PROCEEDINGS
M.L.D., a former Alaska State Trooper, was hired in
December 1988 as the chief of police in King Cove, Alaska. His
written employment contract with the City of King Cove (City) ran
from January 5, 1989 to June 30, 1991. Under the contract, both
parties had the right to voluntarily terminate M.L.D.'s employment
upon thirty days' notice. Although M.L.D. received a merit raise
at the end of his first year of employment, thereafter he came into
conflict with the mayor and City Manager Gary Hennigh over
management and policy decisions. M.L.D. had several discussions
with both the mayor and the city manager about these problems but
was unable to resolve them.
M.L.D. began to suffer depression in mid-1990. This
depression worsened during the winter of that year as he
experienced difficulties at work and became increasingly isolated.
He had difficulty sleeping, ceased seeing friends and attending
church, and frequently discussed suicide. At a city council
meeting in January 1991, the city council, on the recommendations
of the mayor and the city manager, voted not to renew M.L.D.'s
employment contract when it expired in June 1991.
On March 5, 1991, M.L.D. traveled to Anchorage with his
wife on pre-authorized leave for a dentist appointment. Knowing
that his mental condition had worsened, his wife and father-in-law
convinced M.L.D. to check into Charter North Hospital (Charter
North) for a medical examination with Dr. Wilfred Cassell. After
examining M.L.D., Dr. Cassell immediately ordered him hospitalized
at Charter North for treatment of severe major depression and
suicidal ideation. On March 7, 1991, Dr. Jeanne Bonnar, one of
M.L.D.'s doctors at Charter North, determined that M.L.D. was
"totally disabled to work in [his] present and previous profession
as [a] law officer." Dr. Bonnar predicted that M.L.D. would be
disabled and unable to work as a law enforcement officer for at
least twelve months.
Although his authorized medical leave of absence expired
on March 11, 1991, M.L.D. remained hospitalized at Charter North
until March 29, 1991. M.L.D.'s wife testified that she returned to
King Cove on March 9, 1991 and advised Police Officer Powell, one
of M.L.D.'s subordinates, of M.L.D.'s hospitalization. City
Manager Hennigh testified that Officer Powell did not inform him of
M.L.D.'s hospitalization. [Fn. 1] Hennigh testified that he was
first notified that M.L.D. was at Charter North during a phone call
from the Department of Health and Social Services to verify
M.L.D.'s employment. [Fn. 2] Hennigh testified that he
took this [information] back to the City
attorney, and he said, "The only thing that a prudent person in
this position would do would be to exercise the early termination
clause in [M.L.D.'s] contract, because whatever is going on with
[M.L.D.], we simply can't take the risk of having a police chief
that's AWOL on us and that we should just exercise the early
termination clause in his contract."
On March 13, 1991, two days after the expiration of the
approved medical leave, the City terminated M.L.D. by letter
pursuant to the thirty-day notice provision in his contract. While
the letter gave no reason for the termination, the City
subsequently cited M.L.D.'s failure to notify city officials of his
whereabouts after his leave had expired as the reason for his
termination.
Following his termination as police chief, M.L.D. applied
for occupational disability benefits under PERS. M.L.D. claimed
that work-related stress caused him to become permanently disabled
by major depression. Robert Stalnaker, the Administrator of PERS,
denied M.L.D.'s application, finding that his disability was not
"occupational"within the meaning of the applicable PERS statute,
AS 39.35.680(26). [Fn. 3] However, Stalnaker approved M.L.D. for
receipt of nonoccupational disability benefits. [Fn. 4] M.L.D. was
informed that his benefits would be subject to annual medical
reviews for a determination of continuing eligibility.
M.L.D. appealed the denial of his application for
occupational disability benefits to the Board. The Board convened
a special meeting on August 25, 1993 to hear and decide M.L.D.'s
appeal. After hearing testimony, the Board found that M.L.D. had
suffered from varying degrees of depression throughout most of his
employment as chief of police in King Cove, including a period of
time prior to the work-related stress he cites as the cause of his
depression. The Board concluded that M.L.D.'s depression was
caused by many factors, including work-related stresses and
stresses unrelated to his employment with King Cove. However, the
Board did not specifically address whether M.L.D.'s disability was
"occupational"under AS 39.35.680(26). Instead, it concluded that
M.L.D. failed to establish that he was terminated "because of"a
disability as required under AS 39.35.410(a). [Fn. 5] The Board
based its conclusion on findings that M.L.D. was fired due to his
unauthorized leave of absence. The Board determined that M.L.D.
was therefore not entitled to occupational disability benefits.
After the Board affirmed Stalnaker's denial of
occupational benefits, Stalnaker rescinded the award of
nonoccupational disability benefits to M.L.D., since this award
also requires that employment be terminated "because of"a
disability. [Fn. 6] M.L.D. appealed the rescission of his
nonoccupational disability benefits to the Board. The Board
affirmed Stalnaker's action and again concluded that the
preponderance of evidence demonstrated that M.L.D.'s employment was
terminated under his contract due to an unauthorized leave of
absence, and not "because of"a disability.
M.L.D. appealed both of the Board's decisions to the
superior court, which consolidated the two appeals. The superior
court upheld the denial of M.L.D.'s claim for occupational
disability benefits. However, the superior court reversed the
rescission of M.L.D.'s appointment to nonoccupational disability
benefits, finding that Stalnaker did not have the authority to
rescind those benefits eleven months after his initial decision.
Both parties appeal.
III. DISCUSSION [Fn. 7]
M.L.D. argues that the Board and the superior court erred
by focusing on the City's reasons for firing him rather than on the
cause of the termination of his employment. He contends that
[t]he record clearly shows that had M.L.D.
returned to work on March 11, 199[1], the City would not have
terminated his employment on March 13, 1991. It is undisputed that
M.L.D. was absent from work on March 11, 1991, because he was in
the hospital. It is undisputed that he was in the hospital to
receive treatment for a mental disability. It necessarily follows
that he was terminated because of a disability.
The decisions of the Board and the superior court reveal
that they assumed that M.L.D. could only be eligible for disability
benefits if his disability motivated the City to fire him. In its
first decision, the Board found that "[b]ecause [M.L.D.]'s absence
extended beyond his approved leave of absence, Mr. Hennigh
indicated that he felt it necessary and that justification existed
to exercise the early termination rights under the City's contract
with [M.L.D.]." The Board also found that "[t]he reason for
[M.L.D.]'s unauthorized absence was not known to the City Manager,
and the basis for his termination by the City was his failure to
advise of his whereabouts." Based on these findings, the Board
concluded that the
preponderance of the evidence in this case
demonstrates that [M.L.D]'s employment was not terminated because
of a total and apparently permanent occupational disability.
Rather, his termination was a consequence of the exercise by the
City of King Cove of provisions in his contractual relationship
with the City, as further triggered by an unapproved leave of
absence.
In its second decision, the Board again concluded that
"[M.L.D.]'s termination was as a consequence of the City's notice
to him based upon its reading of its contractual rights and
obligations, and not because he was suffering from a disability
which prevented him from performing his duties." While expressing
skepticism about whether M.L.D.'s unapproved absence was the basis
for the termination, the superior court also reasoned that the City
"did not terminate him because of his disability, and I interpret
["]because of["] to mean that that was the reason for the
termination." Instead, the court found that "there were reasons
that Mr. Hennig [sic] didn't like, didn't want, whatever, was
harassing [M.L.D.], as you pointed out, for a long time. That's
why they terminated [him]."
We agree with M.L.D. that the Board and the superior
court should not have focused on the reason the City gives for
firing M.L.D. The PERS disability statutes, by requiring
employment to be "terminated because of a . . . disability,"call
for a broader inquiry into the cause of the termination. AS
39.35.400(a); AS 39.35.410(a). They do not require that the
employer's action be motivated by a disability, nor even that the
employer, rather than the employee, make the decision to end the
employment. See State, Pub. Employees Retirement Bd. v. Cacioppo,
813 P.2d 679, 682-83 (Alaska 1991). Therefore, the Board and the
superior court erred by basing their decisions on the City's
reasons for the termination rather than on the causal relationship
between the termination and M.L.D.'s disability.
In articulating the analysis required by the statutes, we
turn for guidance to the tort law concept of "legal causation." As
we stated in Vincent ex rel. Staton v. Fairbanks Memorial Hospital,
862 P.2d 847, 851 (Alaska 1993), legal cause encompasses both an
actual causation or "but for"prong and a proximate causation or
"legal policy"prong. Under the "but for"prong, the "defendant's
conduct is a cause of the event if the event would not have
occurred but for that conduct." Id. (quoting W. Page Keeton etal.,
Prosser and Keeton on Torts  41, at 266 (5th ed. 1984)).
Under the legal policy prong, the inquiry focuses on "whether the
conduct has been so significant and important a cause that the
defendant should be legally responsible."Id. (quoting Prosser and
Keeton on Torts  42, at 273). Applying these principles in the
context of PERS disability benefits, the first consideration is
whether the termination of the employment would have occurred "but
for"the disability. If this initial prong is met, the inquiry
should then turn to an evaluation of the significance and
importance of the disability's causal role.
In this case, M.L.D.'s disability was an actual cause of
the termination of his employment. The only reason given by the
City for M.L.D.'s termination was his unauthorized leave of
absence. M.L.D. did not return to work at the end of his leave
because he had been hospitalized for major depression and suicidal
ideation. As M.L.D.'s depression was the only reason for his
unauthorized absence, it was a "significant and important"cause of
the termination. On March 7, 1991, six days before the City fired
M.L.D., one of M.L.D.'s doctors determined that his depression
"totally disabled [him] to work in [his] present and previous
profession as [a] law officer"and that he would be disabled for at
least twelve months. In evaluating M.L.D.'s condition after
admission, Dr. Cassell stated that M.L.D. would
not be able to continue employment in the
field of law enforcement, in any capacity, due to Major Depression
as a result of his employment conditions in the City of King Cove
and the long term care that he must undergo. . . . [M.L.D.] should
be considered totally disabled and is unable to perform his duties
as a police officer and will not be able to in the foreseeable
future.
Therefore, we conclude as a matter of law that M.L.D.'s termination
was "because of"his disability as required by AS 39.35.400(a) and
AS 39.35.410(a).
Stalnaker asserts that M.L.D. "waived his right to argue
that he was terminated because of a disability." Stalnaker bases
this argument on the Board's finding in its first decision that
M.L.D.'s "counsel declined to argue that a disability per se was
the basis for [the] termination action." This argument fails to
distinguish between the cause of the termination and the City's
reasons for firing M.L.D. M.L.D. vigorously argued before the
Board that his termination was caused by a disability. [Fn. 8]
Stalnaker also contends that M.L.D.'s failure "to make
sure that Hennigh was aware of the alleged reason why M.L.D. did
not return to work as scheduled"was a "superseding cause"that
broke "the chain of events arising from his alleged disability."
He argues that "it was this failure that caused Hennigh to
terminate M.L.D.'s contract, and not M.L.D.'s absence." This
argument, however, assumes that the City's motive for firing M.L.D.
is the dispositive issue in this case. As discussed above, the
proper focus is not whether the City's reason for firing M.L.D. was
his unauthorized absence, his disability, or his failure to notify
the City of his whereabouts, but the causal role the disability
played in the termination.
Finally, Stalnaker suggests that PERS disability cases,
like employment discrimination cases, should focus on the
employer's motive for terminating the employee. He argues that
"the PERS administrator and the [Board] have the authority to look
behind the stated reason for a termination to see if it is a
pretext, and if the employee was actually terminated because of a
disability." This approach, however, is inappropriate in the
context of PERS disability benefits. Anti-discrimination statutes
are designed to prevent employers from firing employees for
improper reasons. See, e.g., AS 18.80.220(1). Thus, the
employer's motive in terminating the employee is a central issue in
discrimination claims. See French v. Jadon, Inc., 911 P.2d 20, 24-
25 (Alaska 1996). The statutes establishing PERS disability
benefits, however, are not intended to prevent employers from
firing individuals because of their disabilities. Rather, they are
designed to compensate PERS members who, unlike the individuals
protected by anti-discrimination statutes, are no longer able to
perform their jobs. Thus the emphasis in a PERS disability claim
should not be the employer's motive in terminating an employee, but
whether the termination was caused by a disability. [Fn. 9]
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the superior court's
decision that M.L.D. is entitled at a minimum to nonoccupational
benefits. [Fn. 10] We REVERSE the superior court's affirmance of
the Board's denial of M.L.D.'s application for occupational
disability benefits and REMAND this matter to the Board for a
determination of whether M.L.D.'s disability was occupational or
nonoccupational. [Fn. 11]
FOOTNOTES
Footnote 1:
The Board noted that much of Hennigh's testimony about the
dates and duration of M.L.D.'s absence was inaccurate.
Footnote 2:
Hennigh testified that he later received a memorandum from Dr.
Cassell informing him that M.L.D. had been hospitalized.
Footnote 3:
AS 39.35.680(26) defines "occupational disability"as
a physical or mental condition that, in the
judgment of the administrator, presumably permanently prevents an
employee from satisfactorily performing the employee's usual duties
for an employer or the duties of another comparable position or job
that an employer makes available and for which the employee is
qualified by training or education; however, the proximate cause of
the condition must be a bodily injury sustained, or a hazard
undergone, while in the performance and within the scope of the
employee's duties and not the proximate result of the wilful
negligence of the employee.
Footnote 4:
AS 39.35.680(23) defines "nonoccupational disability"in the
same manner as "occupational disability,"except that there is no
requirement that the proximate cause of the condition be an injury
sustained or a hazard undergone while in the performance and within
the scope of the employee's duties.
Footnote 5:
AS 39.35.410(a) provides:
An employee is eligible for an occupational
disability benefit if employment is terminated because of a total
and apparently permanent occupational disability . . . before the
employee's normal retirement date.
Footnote 6:
AS 39.35.400(a) provides:
An employee is eligible for a nonoccupational
disability benefit if the employee's employment is terminated
because of a total and apparently permanent nonoccupational
disability . . . before the employee's normal retirement date and
after five or more years of credited service.
Footnote 7:
This appeal raises both legal and factual issues. When we
review a decision of the superior court sitting as an intermediate
court of appeal, we give no deference to the superior court's
decision. Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746
P.2d 896, 903 (Alaska 1987). When reviewing administrative
decisions, we review questions of law where no agency expertise is
involved under a substitution of judgment test. Municipality of
Anchorage, Police & Fire Retirement Bd. v. Coffey, 893 P.2d 722,
726 (Alaska 1995). The factual findings of the administrative
agency are reviewed to determine whether, in light of the record as
a whole, they are supported by substantial evidence. Miller v. ITT
Arctic Services, 577 P.2d 1044, 1049 (Alaska 1978). Substantial
evidence is "such relevant evidence as a reasonable mind might
accept as adequate to support [the board's] conclusion."
Footnote 8:
Because the question before the Board was whether M.L.D.
qualified for occupational disability benefits, the bulk of the
first hearing involved the link between M.L.D.'s employment
difficulties and his depression rather than the cause of M.L.D.'s
termination.
Footnote 9:
Stalnaker argues in the alternative that M.L.D.'s employment
was terminated on January 29, 1991, the date on which the King Cove
City Council decided not to renew his employment contract. He
asserts that, because M.L.D. was not disabled at that time, the
"termination"could not have been caused by his disability. The
word "termination,"however, generally "refers to an ending,
usually before the end of the anticipated term of the . . .
contract." Black's Law Dictionary 1471 (6th ed. 1990). Stalnaker
acknowledges that, under the city council's decision, M.L.D. was to
have remained in his position as police chief and hence PERS member
until his contract expired on June 30, 1991. Therefore, we hold
that the Board correctly determined that the termination of
M.L.D.'s employment occurred when the City bought out M.L.D.'s
contract after he had been admitted to the hospital in March.
Footnote 10:
Because we base our holding on the alternative ground that the
Board erred in its determination that M.L.D.'s employment was not
terminated because of his disability, we do not address the
superior court's ruling that Stalnaker lacked the authority to
rescind the award of nonoccupational benefits to M.L.D.
Footnote 11:
M.L.D. asks this court to hold as a matter of law that he was
terminated because of an occupational disability. However, in
considering M.L.D.'s first appeal, the Board specifically declined
to rule on whether M.L.D.'s disability was occupational or
nonoccupational. We therefore remand this issue to the Board.
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