PUBLISHED OPINION
Case No.: 95-0073
Complete Title
of Case:
WILLIAM W. WELTER,
DANIEL E. TRAMPE and
EDWARD L. BOWER,
Plaintiffs-Appellants,
v.
CITY OF MILWAUKEE and MILWAUKEE
EMPLOYE'S RETIREMENT SYSTEM
ANNUITY AND PENSION BOARD,
Defendants-Respondents.
Submitted on Briefs: August 1, 1995
Oral Argument: ---
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: December 12, 1995
Opinion Filed: December
12, 1995
Source of APPEAL Appeal from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Milwaukee
(If
"Special", JUDGE: WILLIAM D. GARDNER
so indicate)
JUDGES: Wedemeyer, P.J., Sullivan and Schudson, JJ.
Concurred: ---
Dissented: ---
Appellants
ATTORNEYSFor the plaintiffs-appellants the cause was submitted on
the briefs of Fuchs & Snow, S.C., with John F. Fuchs and Marcia
A. Snow, and Fiorenza & Hayes, S.C., with Daniel J. Miske, of
Milwaukee.
Respondents
ATTORNEYSFor the defendants-respondents the cause was submitted
on the briefs of the City of Milwaukee Attorney's Office, with Grant
F. Langley, and Heidi A. Wick, of Milwaukee.
COURT OF APPEALS DECISION DATED AND RELEASED December
12, 1995 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 95-0073
STATE OF WISCONSIN IN
COURT OF APPEALS
WILLIAM
W. WELTER,
DANIEL
E. TRAMPE and
EDWARD
L. BOWER,
Plaintiffs-Appellants,
v.
CITY
OF MILWAUKEE and MILWAUKEE
EMPLOYE'S
RETIREMENT SYSTEM
ANNUITY
AND PENSION BOARD,
Defendants-Respondents.
APPEAL
from a judgment of the circuit court for Milwaukee County: WILLIAM D. GARDNER, Judge. Affirmed.
Before
Wedemeyer, P.J., Sullivan and Schudson, JJ.
SCHUDSON,
J. William W. Welter, Daniel E. Trampe,
and Edward L. Bower, former City of Milwaukee employees receiving duty
disability retirement benefits, appeal the trial court's grant of summary
judgment to the City of Milwaukee and its Employe's Retirement System Annuity
and Pension Board. The appellants argue
that an offset reducing their duty disability benefits by the amount of
benefits they receive under the Wisconsin Worker's Compensation Act and/or
under the United States Social Security Act is “directly in conflict with the
letter and spirit of the Wisconsin Worker's Compensation Act, as well as
violative of the Supremacy Clause of the U.S. Constitution.” The trial court rejected their arguments,
concluding that the legislature had expressly granted the City of Milwaukee the
authority to reduce duty disability pensions by amounts received under worker's
compensation and social security. We
affirm.
I. BACKGROUND
The
City of Milwaukee's Employe's Retirement System is a corporate entity whose
Board administers a trust fund for payment of pensions, annuities, and other
benefits. The retirement system was
created by Chapter 396 of the Laws of 1937.
The provisions of Chapter 396 of the Laws of 1937 and subsequent
amendments that shaped the Employe's Retirement Act are presently found in
Chapter 36 of the Milwaukee City Charter (MCC), which governs the
administration of the Employe's Retirement System.[1]
MCC
§ 36-05-3-a provides a duty disability retirement allowance for members who
have been disabled by a duty-related injury.[2] MCC § 36-12 provides, however, for a
reduction of city disability payments if members receive payments under state
worker's compensation or similar laws.
MCC § 36-12 states, in part:
Limitations on Payment of Benefits. Any amounts
which may be paid or payable under the provisions of any state worker's
compensation, or similar law, to a member or to the dependents of a member on
account of any disability shall be offset against and payment [sic] in lieu of
any benefits payable out of funds provided by the city under the provisions of
this act on account of the same disability.
The Employe's Retirement Act also provides for an offset
of social security payments pursuant to MCC § 36.06-9 which stated,
in part:
In applying the provisions of this subsection the
maximum duty disability allowance payable to a member participating in the
coordinated plan under the provisions of s. 36-05-3 together with the member's
social security benefit shall be limited to an aggregate sum of 100% of the
member's final average salary.[3]
Employees applying for duty disability are required to
sign one or more forms acknowledging that their worker's compensation and/or
social security disability benefits will be offset against their city duty
disability payments. The City then
calculates its disability payments to the employees, adjusting for the payments
received or expected from these other sources.[4]
Welter,
Trampe, and Bower brought an action for declaratory judgment challenging the
City's authority to reduce their duty disability benefits by offsetting paid or
payable worker's compensation payments and/or paid or payable Social Security
disability benefits. The parties filed
a stipulation of facts and brought simultaneous summary judgment motions.
Reviewing
a grant of summary judgment, we apply the same standards as those of the trial
court. Voss v. City of Middleton,
162 Wis.2d 737, 748, 470 N.W.2d 625, 629 (1991). The methodology for considering summary judgment motions has
often been stated, see Green Spring Farms v. Kersten, 136
Wis.2d 304, 315, 401 N.W.2d 816, 820 (1987), and we need not repeat it
here. Our review is de novo. Id. Further, interpretation of a statute or ordinance is a question
of law, also subject to our de novo review. Hemerley v. American Family Mut. Ins. Co., 127
Wis.2d 304, 307, 379 N.W.2d 860, 862 (Ct. App. 1985).
II. WORKER'S
COMPENSATION ACT
Appellants
first argue that the City's offset ordinance and practice conflict with the
Wisconsin Worker's Compensation Act.
Specifically, they contend that § 102.30(2), Stats., precludes any offset against worker's compensation
payments. In relevant part, §
102.30(2), Stats., provides,
“Liability for compensation is not affected by any insurance, contribution or
other benefit due to or received by the person entitled to that
compensation.” The appellants argue
that any reduction of the duty disability payment as a result of worker's
compensation payments does indeed “affect” the “liability for compensation” in
violation of § 102.30(2), Stats. The City, however, relies on its authority
derived from the statutory requirement that worker's compensation payments
“shall be offset against and payable in lieu of any benefits payable out of
funds provided by the city.” Laws of
1937, ch. 396, § 13.
Rejecting
the appellants' argument, the trial court distinguished between reducing state
worker's compensation and reducing city duty disability payments. Concluding that the legislature had
expressly granted the City the authority to do the latter, the trial court
explained:
[i]t
is the duty disability payments to plaintiffs that are being reduced, not
plaintiffs' worker's compensation payments.
Unquestionably, under Wisconsin law, it would be illegal for an employer
to reduce worker's compensation awards by other sums an employee is eligible to
receive. The operative effect of
Milwaukee City Charter 36-12 and 36-06-09 are [sic] that duty disability
allowances are a supplement to worker's compensation and/or Social Security
disability benefits.
Equally without
question is the fact that if the court were to adopt plaintiffs' argument, City
of Milwaukee workers injured on the job would be able to collect twice—and
possibly more—for the same injury. Wage
loss systems exist to compensate injured employees by ensuring their standard
of living is similar to the standard they enjoyed before being injured. Wage loss systems do not exist to reward
injured employees with benefits exceeding 100% of their former salaries. Such a result would be inequitable and
contrary to public policy.
When
interpreting a statute, we first look to the language of the statute
itself. City of Milwaukee v.
Dyson, 141 Wis.2d 108, 110, 413 N.W.2d 660, 661 (1987). If its language is unambiguous we may not
resort to extrinsic aids for statutory construction. Id. The
language of this statute is unambiguous and its meaning is clear. As the trial court correctly concluded, the
legislature provided for exactly the kind of duty disability reduction that the
City has implemented in its ordinance.
Section 13 of Chapter 396 of the Laws of 1937, in relevant part, stated:
Limitations on payment of
benefit.... Any amounts
which may be paid or payable under the provisions of any state workmen's
compensation or similar law to a member or to the dependents of a member on
account of any disability or death shall be offset against and payable in lieu
of any benefits payable out of funds provided by the city under the provisions
of this act on account of the same disability or death.
Indeed, the statute mandated the City's reduction of
payments—the worker's compensation payment “shall be offset against and
payable in lieu of any benefits payable out of funds provided by the city.”
(Emphasis added.)
The
appellants argue that § 102.30(2), Stats.,
precludes the very reduction that Section 13 required. We disagree. Section 102.30(2), Stats.,
states:
An employer may
provide by mutual or other insurance, by arrangement with employes or
otherwise, for the payment to those employes, their families, their dependents
or their representatives, of sick, accident or death benefits in addition to
the compensation provided under this chapter.
Liability for compensation is not affected by any insurance,
contribution or other benefit due to or received by the person entitled to that
compensation.
The appellants repeatedly invoke this section but quote
only its last sentence. Thus they
ignore the context that clarifies that this statute addresses employers'
“[l]iability for compensation”[5]
payments under the Worker's Compensation Act—i.e., the obligation of the
employer to contribute to the state worker's compensation fund regardless of
whether the employer also provides other insurance. Therefore, § 102.30(2) does not relate to the offset issue
and does not foreclose the City from reducing its duty disability payments.[6]
The
appellants present several scenarios to show how, under certain hypothetical
circumstances, the “operative effect” of the offset could be a reduction in
worker's compensation benefits or, at the very least, a requirement that
employees “pay for their own state worker's compensation” by losing some of
their disability payments. The
appellants also contend that there should not be an offset because worker's
compensation payments serve purposes that are separate from and in addition to
those served by duty disability payments.[7]
The
appellants present intriguing arguments and compelling public policy concerns.[8] The scenarios they offer, however, are
dissimilar from those presented in this appeal. Here, the City's reductions of duty disability payments for the
three appellants are offsets against permanent partial disability benefits
under worker's compensation (and, in Bower's case, also against social security
benefits). The City explains that
although MCC § 36-12 provides that “any” amounts paid or payable under the
Worker's Compensation Act will be offset, “only those amounts paid for
permanent partial disability are actually offset against the duty retirement
allowance.” Whether the appellants'
arguments would prevail under other circumstances or in the hypothetical
scenarios they present are issues beyond the facts of this appeal.
Appellants
also argue that the legislature, by amending § 102.07, Stats., in 1955, rejected the offset
authority. Until 1955, § 102.07(2)
in part provided:
Any policeman or
fireman claiming compensation shall have deducted from such compensation any
sum which such policeman or fireman may receive from any pension or other
benefit fund to which the municipality may contribute.
Section 102.07(2), Stats.
(1953). In 1955 the legislature deleted
this language. Appellants, however,
have offered no legislative history or other authority to explain the reason
for the revision or to suggest that it somehow related to any legislative
intent to revoke the offset authority of Chapter 396. We will not assume such revocation or repeal by implication. See State v. Struzik, 113
Wis.2d 245, 248, 335 N.W.2d 432, 433 (Ct. App. 1983).
III. SOCIAL SECURITY ACT
The
appellants also argue that any reduction of the city duty disability payments
by virtue of the receipt of social security payments violates the Supremacy
Clause of the United States Constitution.
See U.S. Const.,
art. VI. The Supremacy Clause provides:
This constitution, and the laws of the United States
which shall be made in pursuance thereof ... shall be the supreme law of the
land; and the judges in every state shall be bound thereby any thing in the
constitution or laws of any state to the contrary notwithstanding.
The appellants thus contend that payments under the
Social Security Act, 42 U.S.C. § 401, et seq., must not result in
reduced payments by the City.
Appellants rely on Rose v. Arkansas State Police, 479 U.S.
1 (1986) (per curiam), in which the United States Supreme Court prohibited the
State of Arkansas from applying a state statute that reduced state death
benefits to the widow of an Arkansas State Trooper by virtue of federal death
benefits she also was receiving. The
Court concluded that “Congress plainly intended to give supplemental benefits
to the survivors, not to assist the States by subsidizing their benefit
programs,” id. at 4, and, therefore, that the Arkansas statute
violated the Supremacy Clause.
Rose, however, is distinguishable. The federal statute specifically provided that the federal death
benefit “‘shall be in addition to any other benefit that may be due from any
other source.’” Id.
(emphasis omitted). Thus, the Arkansas
statute unlawfully authorized precisely the reduction that the federal act
prohibited. By contrast, however,
unlike the federal Public Safety Officers' Death Benefits Act at issue in Rose,
nothing in the Social Security Act prohibits the City from offsetting duty
disability pension payments by social security disability payments.
The
appellants argue that because the Social Security Act specifically sets forth
items for which a reduction of insurance benefits may be taken, see 42
U.S.C. § 403, and because offsets such as those involved in this case are not
specified, the offsets are precluded.
The City counters, however, that no language in the Social Security Act
prohibits the City from offsetting duty pension benefits for social security
disability payments. The United States
Supreme Court confronted a similar circumstance in Alessi v.
Raybestos-Manhattan, Inc., 451 U.S. 504 (1981) (concluding that pension
integration under ERISA with worker's compensation benefits was lawful).
In
Alessi, retirees argued, in part, “that the workers' compensation
offset provisions of their pension plans contravene ERISA's nonforfeiture
provisions,” id. at 509, “that no vested benefits may be
forfeited except as expressly provided in [29 U.S.C.] § 1053,” id.
at 511, and “that offsets based on workers' compensation fall into none of
those express exceptions.” Id. To the extent that the Court agreed, it did
so specifically because Ҥ 1053(a) prohibits forfeitures of vested rights
except as expressly provided in § 1053(a)(3), and the challenged workers'
compensation offsets are not among those permitted in that section.” Id. The Social Security Act includes no comparable prohibition and,
indeed, in Alessi, the Court, allowing offsets, specifically
noted that “[s]uch offsets [for worker's compensation awards] work much like
the integration of pension benefits with Social Security.” Id. at 516.
In
Alessi, the Supreme Court recognized the propriety of “promoting
a system of private pensions by giving employers avenues for cutting the cost
of their pension obligations.” Id.
at 517. Writing for a unanimous Court,[9]
Justice Marshall explained:
It is particularly
pertinent for our purposes that Congress did not prohibit “integration,” a
calculation practice under which benefit levels are determined by combining
pension funds with other income streams available to the retired
employees. Through integration, each
income stream contributes for calculation purposes to the total benefit pool to
be distributed to all the retired employees, even if the nonpension funds are
available only to a subgroup of the employees.
The pension funds are thus integrated with the funds from other income
maintenance programs, such as Social Security, and the pension benefit level is
determined on the basis of the entire pool of funds. Under this practice, an individual employee's eligibility for
Social Security would advantage all participants in his private pension plan,
for the addition of his anticipated Social Security payments to the total
benefit pool would permit a higher average pension payout for each
participant. The employees as a group
profit from that higher pension level, although an individual employee may
reach that level by a combination of payments from the pension fund and
payments from the other income maintenance source. In addition, integration allows the employer to attain the
selected pension level by drawing on the other resources, which, like Social
Security, also depend on employer contributions.
Id. at 514. Thus, the Court
acknowledged that Congress had struggled with the possibility that promoting
pension programs by allowing offsets could seem to result both in disadvantages
for individual retirees and overall advantages for all employees ultimately
eligible for benefits. See id.
at 514-517. In Alessi, as
in the instant case, the legislative call may have been a close one, but “[o]ur
judicial function is not to second-guess the policy decision of the
legislature, no matter how appealing we may find contrary rationales.” Id. at 521.
Thus,
we conclude that the City has authority to offset its duty disability payments
against state worker's compensation and federal social security payments. The trial court correctly granted summary
judgment.[10]
By
the Court.—Judgment affirmed.
[1] Following the
enactment of Chapter 396 in 1937, the City administered its retirement system
under the mandates of Chapter 396. In
1947, however, the legislature explicitly granted the City home rule authority
over Chapter 396 pension matters. See
Laws of 1947, ch. 441. Section 31
of Chapter 441 of the Laws of 1947 (subsequently codified as MCC § 36-14), in
part provided:
For the purpose of giving to cities of the first class
the largest measure of self-government with respect to pension annuity and
retirement systems compatible with the constitution and general law, it is
hereby declared to be the legislative policy that all future amendments and
alterations to this act are matters of local affair and government and shall
not be construed as an enactment of statewide concern. Cities of the first class are hereby empowered
to amend or alter the provisions of this act in the manner prescribed by
section 66.01 of the statutes ....
Thus, after 1947, when the City made revisions to the
retirement system, it did so pursuant to § 66.01, Stats. Then, in 1959,
Chapter 396 was codified at MCC Chapter 36.
MCC § 36-12, one of the provisions at issue in this appeal, recites
(with minimal modification immaterial to this case) the original language of
§ 13 of Chapter 396 of the Laws of 1937.
[2] MCC
§ 36-05-3-a in relevant part, provides:
Any member in active service who shall become permanently
and totally incapacitated for duty as a natural and proximate result of an
injury occurring at some definite time and place while in the actual
performance of duty shall, upon filing a request for retirement with the Board
... be entitled to a duty disability retirement allowance ... provided the
medical council or medical panel after a medical examination of such member
shall certify that such member is mentally or physically incapacitated for
further duty as a result of such service injury and such incapacity is likely
to be permanent and such member should be retired.
[3] This section was amended on October 18,
1994. The amendment, however, is not
relevant to this appeal.
[4] In their brief
to this court, the appellants summarize the methods of payment calculation:
As to the offset of
worker's compensation benefits, the City's Employe Benefits Administration,
Worker's Compensation Section calculates the amounts paid or payable in
worker's compensation benefits to be offset against the member[']s duty
disability benefit. Next an actuary
calculates the offset for any portion of the worker's compensation benefit paid
after the effective date of the grant of a duty disability retirement
allowance. This calculation includes
interest and mortality. Finally, the
ERS staff calculates the offset for the portion of worker's compensation
benefits paid prior to the member[']s effective date of the grant of a duty
disability retirement allowance. The
Board then informs the member of the total amount of worker's compensation
benefits that will be prospectively offset from his duty disability allowance.
As to social
security benefits, the Employe's Retirement System calculates an assumed
social security disability award and deducts that amount of duty disability
retirement allowance and the social security disability award combined that is
in excess of 100% of the member's final average salary on a dollar-for-dollar
basis. Each member is requested to
appeal a denial of social security benefits to the hearing stage, and if social
security benefits are ultimately denied at hearing, the Board makes a retroactive
adjustment to the members duty disability retirement allowance.
(Italics
in original; citations omitted.) Under
paragraph VII 7.d.1 of the Rules and Regulations of the retirement system,
pensioners also have the option to have the City “[i]ssue a lump sum payment to
the Employes' Retirement System equal to the total principal of the Worker's
Compensation award so that no offsets are applied to their duty disability
pensions.”
According
to the stipulated facts in this case, Welter, Trampe, and Bower had their duty
disability payments calculated with consideration of various offsets, resulting
in reductions of duty disability payments ranging from $32.14 per month to
$522.54 per month.
[6] As the City also
points out, § 102.30(2), Stats.,
has existed since enactment of the original Worker's Compensation Act in
1911. Appellants have offered nothing
to suggest that in 1937 the legislature enacted the offset provision in
conflict with the existing worker's compensation law.
[7] The Supreme Court was not persuaded by a
similar argument in Alessi v. Raybestos-Manhattan, Inc., 451 U.S.
504 (1981) (concluding that pension integration under ERISA with worker's
compensation benefits was lawful). The
Court concluded that offsets are not precluded simply because there may not be
“an identity between the purposes of pension payments and the purposes of the
other integrated benefits.” Id.
at 519.
[8] In addition to the arguments, we note MCC §
36-13-1, which states:
LEGISLATIVE POLICY.
Employes have been attracted to and have remained in the public service
in cities of the first class despite the prevailing higher wages in other
employments because of the deferred compensation for their services promised to
them in the form of retirement annuities and death benefits in the retirement
system to which they have been admitted as contributing members. The purpose of this act is to strengthen the
public service in cities of the first class by establishing the security of
such retirement and death benefits.
[10] Because we
conclude that the City's offset is consistent with the authority granted by the
legislature, we need not address the appellants' additional argument that the
City exceeded its “home-rule” authority by enacting MCC § 36-12-1. As the City has argued, whether or not it
could have relied on its home rule authority to act, it is authorized to
implement the offset consistent with the legislative scheme originally set
forth in Chapter 396 of the Laws of 1937.
See Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W.
663, 665 (1938) (only dispositive issue need be addressed).