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1980-0109_OC EMPLOYEES RETIREMENT SYSTEM_Settlement Agreement
1 SETTLEMENT AGREEMENT 2 3dd THIS AGREEMENT, made and entered into this �— day of 4 19 OD , by and between the BOARD OF RETIREMENT OF THE ORANGE COUNTY 5 EMPLOYEES RETIREMENT SYSTEM (hereinafter "BOARD") and the CITY OF SAN JUAN 6 CAPISTRANO, a municipal corporation (hereinafter "CITY"); 7 WITNESSETH: 8 WHEREAS, certain employees of the CITY are members of the Orange 9 County Employees.Retirement System, which is governed and administered by 10 BOARD; and 111 WHEREAS, on or about May 8, 1978, Michael L. Thompson, an employee 1211of CITY, was granted a service -connected disability retirement by BOARD, 13 and a dispute has arisen between CITY and BOARD on the issue of which 14 party must pay the cost of Michael L. Thompson's disability retirement; J, W F N o; ; 15 and W 0 u LLuF� 16 WHEREAS, such dispute has caused the BOARD to file a lawsuit against oz� 00 17 the CITY, said lawsuit being entitled Board of Retirement of the Orange 18 County Employees Retirement System v. City of San Juan Capistrano, Orange 19 1county Superior Court No. 31-80-56; and 20 WHEREAS, the foregoing lawsuit is now pending in the Superior Court 21 of the State of California, for the County of Orange; and 22 WHEREAS, BOARD and CITY both wish to compromise and settle this dis- 23 pute, and compromise and settle the foregoing lawsuit, without the burden 24 and expense of further litigation; 25 NOW, THEREFORE, THE PARTIES AGREE AND CONTRACT AS FOLLOWS: N 26 1. The foregoing recitals of fact are true. N N O LL 27 2. CITY shall pay to BOARD a sum of money to defray the cost of pro - 28 viding disability retirement benefits to Michael L. Thompson, including urnh: ac 1.2-5-7 1. III any survivors' benefits which may become payable to the surviving spouse 2 and/or minor children of the said Michael L. Thompson. The amount 3 by CITY to BOARD shall be as set forth hereinbelow. 111 3. In order to compromise and settle this dispute, the parties 5 agree that as of August 2, 1978, CITY has been indebted to BOARD in the 6 principal amount of $108,177.27, plus interest thereon accruing at the 7 rate of six percent (6%) per annum from August 2, 1978. Prior to October 8 15, 1979, no part thereof had been paid. As of October 15, 1979, the 9 principal balance owed by CITY and the accrued interest thereon totalled 10 $115,983.82. This total sum of $115,983.82, with accrued interest on the 11 declining balance, shall be paid by CITY to BOARD in semi-annual install - 12 1 ments of $20,786.74 each, the first installment being due and payable 2411received by BOARD from CITY, BOARD shall then dismiss the pending lawsuit 2511 entitled Board of Retirement of the Orange County Employees Retirement N 26 N N 27 MIIA 2. 13 on October 15, 1979 and future installments being due and payable at 14 six-month intervals thereafter. The entire payment schedule is set W, 0>> 15 forth below: 00 w u °° w 16 4> � 4 f 2 o=a Total Principal � 0 17 Payment Date Principal Interest Payment Balance_ $115,983.82 1. Oct. 15, 1979 $20,786.74 - $20,786.74 95,197.08 19 2. Apr. 15, 1980 17,930.83 $2,855.91 20,786.74 77,266.25 3. Oct. 15, 1980 18,468.75 2,317.99 20,786.74 58,797.50 20 4. Apr. 15, 1981 19,022.81 1,763.93 20,786.74 39,744.69 5. Oct. 15, 1981 19,593.50 1,193.24. 20,786.74 20,181.19 21 6. Apr. 15, 1982 20,181.19 605.44 20,786.63 - 22 �3 4. After the October 15, 1979 payment of $20,786.74 has been 2411received by BOARD from CITY, BOARD shall then dismiss the pending lawsuit 2511 entitled Board of Retirement of the Orange County Employees Retirement N 26 N N 27 MIIA 2. 1 System v. City of San Juan Capistrano, Orange County Superior Court 2 No. 31-80-56. Thereafter, CITY promises to make, in a timely fashion, 3 all future installment payments to BOARD pursuant to the terms of this 4 agreement. In the event CITY should fail or refuse to tender any payment 5 pursuant to this agreement on or before the date such payment is due, 6 the entire unpaid principal balance and interest thereon shall immediately 7 become due and payable to BOARD, and BOARD may make use of any available 8 legal remedies to enforce such payment. Any legal action by BOARD to 9 enforce payment under this agreement shall constitute a new cause of 10 action based on a breach of this agreement, and shall not be barred by the 11 dismissal of Orange County Superior Court Case No. 31-80-56. 12 5. The failure of either party to insist upon strict performance 13 of any of the terms or conditions in this agreement shall not be deemed 14 a waiver of any right or remedy that either party may have and shall not J � WF o;z 15 be deemed a waiver of any right or remedy for a subsequent breach or W°° 4;w 16 default of the terms or conditions herein contained. 4 Z Z X00 17 6. This agreement shall not be assigned by either party without the 18 written consent of the other party. 19 7. Each party shall bear its own costs and attorney's fees incurred 20 in connection with Orange County Superior Court Case No. 31-80-56. 2111 8. This agreement is entered into in order to effect a negotiated 22 11 settlement and compromise of a disputed claim. 2311 // 24 25 26 N O LL 27 MIM 3. 0 0 1 WHEREFORE, this agreement is executed in the County of Orange, State 2 of California, on the date and year first above written. 3 4 5 APPROVED AS TO FORM 6I ADRIAN KUYPER, COUNTY COUNSEL ORANGE COUNTY, CALIFORNIA 7 B 9 Donald H. Rubin, Deputy 10 tZr �f � 11 12 13 14 18 19 20 21 22 23 24 25 26 N N T 0 27 LL I BOARD OF RETIREMENT OF THE ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM By Chai an CITY OF SAN JUAN CAPISTRANO, a Municipal Corporation By KENNET— Title Mayor Date: January 9, 1980 "CITY" ATTEST: •" •Y APPROVED • FORM i Y ATTORNEY 4. v l - AGENDA ITEM TO: FROM: SUBJECT: SITUATION: 0 James S. Mocalis, City Manager Mary Ann Hanover, City Clerk u February 7, 1979 Claim for Benefits - Orange County Employees Retirement System On January 12, 1979, the City received a Claim for benefits, filed by Adrian Kuyper, County Counsel, and Donald H. Rubin, Deputy, on behalf of the Board of Retirement of the Orange County Employees Retirement System. Copies of the Claim were distributed to you upon receipt; the original is on file on the City Clerk's Office. FINANCIAL CONSIDERATIONS: The Claim is in the amount of $108,177.27. ALTERNATE ACTIONS: 1. Deny the Claim and refer same to the City's insurance carrier, Dan Gorman Insurance. 2. Approve the Claim and authorize payment. RECOMMENDATION: By motion, deny the Claim and refer same to the City's insurance carrier, Dan Gorman Insurance. A formal notice of rejection, as required by the Government Code, will be sent to the Claimant. Respectfully submitted, MARY ANN Fi%ANOVER MAH/cj FOR CITY COUNCIL AGENDA ... I1 ADRIAN KUYPER, COUNTY COUNSEL and DONALD H. RUBIN, DEPUTY 2 10 Civic Center Plaza P. O. Box 1379 3 Santa Ana, California 92702 4 Telephone: (714) 834-3739 5 Attorneys for Claimant 6 7 BEFORE THE CITY COUNCIL 8 CITY OF SAN JUAN CAPISTRANO 9 10 Claim of the BOARD OF RETIREMENT OF THE ) ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM, ) 11 ) NOTICE OF CLAIM against the CITY OF SAN JUAN CAPISTRANO ) (Govt. Code Sec. 910) 12 1 1 13 TO THE CITY OF SAN JUAN CAPISTRANO, a municipality situated within 14 the County of Orange, State of California: J � Wf Z 15 0The Board of Retirement of the Orange County Employees Retirement O � Woo LL;w 16 System, a public entity organized and existing pursuant to Government Code 4� 2 0 Z Q 00 17 Sections 31450-31898, hereby makes claim against the City of San Juan 18 Capistrano for the sum of $108,177.27. 191 . 20 The name and post office address of Claimant are as follows: 21 Board of Retirement Orange County Employees Retirement System 22 P. O. Box 4515 Santa Ana, California 92702 23 24 II. 25 All notices concerning this claim may be sent to Claimant's N 2 26 attorneys: N LL 27 // �� x 0/0 /S ® 28 C. 2lyr� DHR:ac 0 0 1 Adrian Kuyper, County Counsel and Donald H. Rubin, Deputy 2 10 Civic Center Plaza P. O. Box 1379 3 Santa Ana, California 92702 511 The facts and circumstances giving rise to this claim are as fol 6 (a) Effective November 1, 1975, Claimant and the City of San Juan 7 Capistrano (hereinafter "City") entered into a written agreement, a true 8 and correct copy of which is attached hereto as Exhibit "A" and incorpor- 9 ated by reference herein as though set forth in full. Pursuant to said 10 Agreement, employees of the City became members of Claimant retirement 11 system. The attached Agreement, Exhibit "A" hereto (hereinafter "Agree - 12 ment") sets forth certain terms and conditions by which City would pay its 13 proper share for providing retirement benefits to City employees. 14 (b) At the time the Agreement was entered into and became effec- w o�; 15 tive, Michael L. Thompson was an active employee of the City. By law, and w 0 , 16 by the provisions of the Agreement and the resolution of the City author - LL � 2 o Z a 00 17 izing the Agreement, Michael L. Thompson became a member of Claimant 18 Orange County Employees Retirement System effective November 1, 1975. 19 (c) At or about the time the Agreement became effective, Michael L. 20 Thompson was given a physical examination by the County of Orange, in 21 accordance with the terms of the Agreement. As a result of this examina- 22 tion, Michael L. Thompson was found to be suffering from a physical im- Z3 pairment which would have disqualified him from similar employment from 24 the County of Orange, or would have required him to sign a waiver pursuant 25 11t Government Code Section 31009 prior to becoming employed by the County 26 of Orange. N N LL 27 (d) Pursuant to the foregoing, and pursuant to the provisions of ® 28 the Agreement, the City became contractually obligated to pay the cost of -2- 0 • 1 any disability retirement which Michael L. Thompson might thereafter be- t come entitled to as a result of the physical impairment discovered at the 3 physical examination given by the County of Orange in accordance with the 4 Agreement. 5 (e) On May 8, 1978, Michael L. Thompson received a service -connects 6 disability retirement from Claimant Orange County Employees Retirement 7 System. Said disability retirement was due to a work-related aggravation 8 of the physical impairment which existed as of the time Mr. Thompson was 9 given a medical examination by the County of Orange. As of May 8, 1978, 10 the City became contractually obligated to pay the cost of the disability 11 retirement allowance for Michael L. Thompson, and hold Claimant free and 12 harmless from any liability for payment of disability retirement benefits 13 to said Michael L. Thompson. The total present actuarial value of the 14 service -connected disability retirement allowance payable to Michael L. J, W, oz, 15 Thompson, calculated as of the effective date thereof, is $108,619.57. w o ° LL;w 16 Of this total amount, $442.30 is financed by the contributions deducted 0 Z Z I < 00 17 from the salary of said Michael L. Thompson. The remaining amount, 1811$108,177.27, is the amount which the City is contractually obligated to 1911pay to Claimant pursuant to the terms of the Agreement, Exhibit "A" hereto 2011A copy of the actuarial calculation is attached hereto as Exhibit "B", 21 and incorporated by this reference herein. 22 (f) Claimant, acting through its authorized agents, has made timely 2311request to officials of the City to pay the amount due and owing, but said 2411officials of the City have refused to make payment. Attached hereto are 25 Il copies of relevant correspondence between agents of the Claimant and I 26 agents of the City: N N P LL 27 1. Letter dated September 28, 1978, from E. Phillip 28 �� Hale, Assistant City Manager of San Juan Capistrano, to ® Thomas Bogdan, Exhibit "C" hereto. -3- 0 1 2. Letter dated October 16, 1978, from County Counsel to E. Phillip Hale, Exhibit "D" hereto. 2 3. Letter dated October 26, 1978, from James S. 3 Okazaki, City Attorney of San Juan Capistrano, to County Counsel, Exhibit "E" hereto. 4 4. Letter dated November 1, 1978, from County Counsel 5 to Mr. Okazaki, Exhibit "F" hereto. 6 The foregoing correspondence, Exhibits "C" through "F" inclusive, are all 7 attached hereto and incorporated by this reference herein as though set 8 forth in full. This correspondence is attached to this claim in order to 9 give the City additional facts and information concerning this claim, and 10 assist the City in its evaluation of this matter. 11 (g) The continued refusal of the City to pay the amount due and 12 owing constitutes a material breach of the Agreement between the City and 13 the Claimant, Exhibit "A" hereto. The contractual obligation which forms 14a basis for this claim first arose on May 8, 1978, and this claim is filed J, W, off; 15 within one year after the accrual of the cause of action. wo, 16 " W IV. 4 Z 2 o Z a 00 17 WHEREFORE, Claimant requests that this claim be granted, and that 18 the City pay Claimant the sum of $108.177.27. 19 Dated: January 11, 1979 Respectfully submitted, 20 ADRIAN KUYPER, COUNTY COUNSEL and DONALD H. RUBIN, DEPUTY 21 00x1, BY 23 Do X ,(iDieap(ulLC.L 24 Attorneys for Claimant 25 26 N N 27 LL -4- AGREEMENT RELATING TO MEMBERSHIP OF THE CITY OF SAN JUAN CAPISTRANO IN THE ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM THIS AGREEMENT is entered into as of the first day of November, 1975, by and between the CITY OF SAN JUAN CAPISTRANO, hereinafter called "CITY," and the BOARD OF RETIREMENT OF THE ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM, hereinafter called "BOARD." W I T N E S S E T H: WHEREAS, CITY is a. "District" within the definition of Section 31468 of the Government Code (County Retirement Law of 1937), and is, accordingly, eligible to participate in the Orange County Employees Retirement System pursuant to said Law; and WHEREAS, CITY has, by its resolution dated July 16, 1975, and passed by a four-fifths vote, authorized participation in the aforesaid retirement system, and to make contributions on behalf of its officers and employees for the acquisition of credit for prior public service; and WHEREAS, all of CITY'S officers and employees, who are prospective members of the Retirement System, have had no public service other than as officers and/or employees of the CITY or agencies which are members of the state Public Employees' Retire- ment System (PERS); and WHEREAS, BOARD is willing to accept the aforesaid membership of CITY in the Orange County Employees Retirement System on the conditions specified below. NOW, THEREFORE, CITY and BOARD hereby agree that officers and employees of the CITY shall become members of the Orange County Employees Retirement System, effective November 1, 1975, subject to the following terms and conditions: 1. All of CITY'S officers and/or employees shall be subject to medical approval of the County as determined by the results of physical examinations, and if any shall be found medically unqualified, CITY agrees, in consideration of member- ship of such person, to keep and hold the BOARD free and harm- less from any liability for disability claims that may arise as a result of the aforesaid medical reasons, except to the extent of the employee's contributions. If an employee becomes entitled to a disability retirement allowance arising out of the condition for which the County deemed him or her unqualified, the CITY will be liable for all amounts of such retirement allowance, including survivor benefits and death benefits not funded by the employee and employer's contributions. 2. CITY shall pay to the BOARD the sum of $41,003.00 plus 7.940 of the total compensation paid from July 1, 1975, to November 1, 1975, in consideration of the right of CITY'S officers and employees to credit for their prior service with the CITY of San Juan Capistrano. A list of the officers and employees together with the length of known prior service and actuarial calculations representing current sums required to -1- EXHIBIT A purchase such prior service is set forth in Exhibit "A" attached hereto and made a part hereof. CITY shall pay to BOARD an additional sum for any expediture of funds which may arise because of the prior public service of any listed officer or employee other than that set forth on Exhibit "A", and for such other sums as may be found to be due and owing because of actuarial adjustments to the entire schedule of the retirement system. CITY shall reimburse BOARD for any expenditure of funds which may arise because of any officer or employee having been a member of a. public agency other than the CITY or PERS, and for such other sums as may be found to be due and owing because of actuarial adjustments to the entire schedule of the Retire- ment System. 3. Schedule of Payments: In lieu of the payment of the sum of $41,003.00 on the first day of the month following the effective date of this Agreement, the CITY may make payments in accordance with the following schedule until the principal amount of $41,003.00 is paid in full: On the first day of the month following action by the BOARD, the sum of not less than $8,200.60, and on each succeeding anniversary date a sum of not less than $8,200.60 plus interest on the balance of the amount remaining to be paid at the rate of the interest assumption rate in effect on the date of the payment. 4. All contributions and administrative charges assessed by the BOARD to be made by the CITY for the CITY and its officers and employees shall be made promptly and in strict accordance with the rules and regulations of the BOARD on or before the tenth day of each month. CITY OF SAN JUAN CAPISTRANO BOARD OF RETIREMENT OF THE ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM By.� By `� AbIES K. WEATHERS, MAYOR Bradley . Gates, Vice Chairman te: October 23, 1975 ATTEST: {�I e MARY ANN H NOVER, CITY LE APPROVED AS TO FORM: :JAMES S. OKAZAKI, City Attorney By U Date: %d _ 30 25' -2- EXHIBIT A OPME COUNTY EMPLOYEES RETIAT ASSOCIATION INPUT RFCFTVFD SFPVTCE CONNFCTFO 0ISARI1_ITY RET!REMFNT DATE OF RETIREMENT: 12/14/77 PARTICIPANT: MTCHAFL THOMPSON SFX: M GENERAL MEMBER CONTINGENT ANNUITANT: NTNA C. THOMPSON SEX: F ID KID.: DATE OF 9TPTH: 3/31/50 r.A.DATE OF BIRTH: 12/ 6/51 SERVICE PRIOR TO 1/1/45: 0.0 YEARS SERVICE AFTFR 1/1/4G A. NON-IMTFGRATED: 4.25000 YEARS, SERVICE AFTER INTEGPATTON DATE: 0.0 YEARS FINAL COMPENSATION: 13387.80 TPFAC CALCULATTONq COMPENSATION USED IN BENEFIT CALCULATIONS: 1115.65 PARTICIPANT AGF: 27.50 CONTINGENT ANNUITANT AGF: 26.00 aaaaaanaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaao TPF&C CERTIFIES THAT THE ABOVE CALCULATIONS ARE CONSISTENT WITH THE INPUT RECEIVED Fff Date Increase Total 4-1-78 16.73 $574.56 EXhiBIT B RENEFTT PRESENT VALUE aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa OPTION ANNUITY PENSION TOTAL ANNUITY PENSION TOTAL CURRENT PRTOR rUPRENT PRTOR SERVTCE SERVICE SERVICE SERVICE REG 2.97 554.86 0.0 557.83 442.30 1OR177.27 0.0 108619.57 I 2.72 554.86 0.0 557.58 442.30 82507.28 0.0 82949.58 I1 2.27 423.73 0.0 426.00 442.30 82507.28 0.0 82949.58 III 2.57 480.51 0.0 483.08 442.30 82507.28 0.0 82949.58 IV FIGURES AVAILABLE UPON REQUEST 100% AUTOMATIC CONTINUANCE= 557.83 TPF&C CERTIFIES THAT THE ABOVE CALCULATIONS ARE CONSISTENT WITH THE INPUT RECEIVED Fff Date Increase Total 4-1-78 16.73 $574.56 EXhiBIT B ;' ];400 PASEO AOE4ANT0. SAN JUAN'CAPISTRANO. CALIFORNIA 92675 I r ";HONE 493.I 171' September 28, 1978 Mr. Thomas Bogdan^" Retirement Administration P.O. Box 4515 Santa Ana, CA 92706 RE: DISABILITY RETIREMENT MICHAEL L, THOMPSON S.S. No. 566-70-1505 Dear Mr, Bogdan: On May 11, 1978, the City of San Juan Capistrano received a copy of a letter dated May 8, 1978, addressed to Michael L. Thompson, S.S. No. 566-70-1505, notifying him that he had been granted a service -connected disability retirement by the Orange County Board of Retirement. Included with this letter was a letter stating that the costs associated with the award of the service -connected disability retirement for Michael L. Thompson were to be borne by the City of San Juan Capistrano. On August 3, 1978, the City of San Juan Capistrano received a letter from your office informing the City that the present value of Michael L. Thompson's retirement benefits amounted to $108,177.27, and that it was due and payable. In response, please be advised that the City of San Juan Capistrano must reject this claim on the grounds that the City was not notified at the time the City entered the Orange County Retirement System, of any re- quirement by the Board of Retirement that Michael L. Thompson sign a disability waiver, at that time, which would have precluded his application for a disability retirement for this alleged service -connected disability. Sincerely, E, Phillip H e Assistant City Manager/Director EPH:sr of Administrative Services The Retirement Administrator of the Orange County Employees Retirement System has referred the above -referenced matter to this office for appropriate action. we have reviewed your letter of September 28, 1978, in which you have stated that the City of San Juan Capistrano will not reimburse the Orange County Employees Retirement System for the present value of the disability retire- ment allowance payable to Michael L. Thompson, a former employee of the City. The present value of Mr. Thompson's disability retirement allowance, as calculated by the Retirement System's consulting actuary, is $108,177.27. In reviewing your letter, it appears that there may be some misunderstanding regarding the respective rights and obligations of the City and the Retirement System pursuant to the agreement of November 1, 1975. We have reviewed that agreement, as well as Mr. Thompson's retirement file, and the relevant facts appear to be as follows: Mr. Thompson was initially employed by the City of San Juan Capistrano on or about March 19, 1973. He remained continuously employed by the City until at least December 14, 1977, when he applied for a service -connected disability retirement. His applica- tion was subsequently granted. In 1975, the City adopted a resolution pursuant to Government Code Section 31557(b) to join the Orange County Employees Retirement System. The Board of Retirement subsequently approved the City's participation in the Retirement System. In accordance with Govern- ment Code Section 31564.5, the City and the Retirement System entered EXHIBIT AlDp ADRIAN KUYPER • COY NTY GOVN•\L OFFICES OF WILLIAM J. McCOURT cnlo wuivwNr THE COUNTY COUN'SEL ROBERT F, NUTTMAN ARTHUR C.NUTTM EDT, JR. wu nrwNT• 7 � C o �l m y Of Orange JOHN W. ANDERSON L AURENCE M. WATSON VICTOR T. BELLERUE HALL OF ADMINISTRATION P. O. BOX 1379 • SANTA ANA, CA 92702 • 830.3300 JOHN R. GRIS ET CHARLES B. SEV IER WALTER D. WEBSTER October 16, 1978O JAMES R. FLOURNOY TERRY C. ANDRUS TERRY E. DIXON EDWARD N. DURAN BARBARA TAM THOMPSON RICHARD D. OVIEDO 0. M. MOORE JULEE R. SAMS NATIVIDAD F. CHAVIRA E. Phillip Hale ENJAMP. DE MAYO RONALD' W. STENLAKE Assistant Cit Manager Y 9 R. DONALD MCINTYRE City of San Juan Capistrano HOWARD SERBIN M.TONIPERRY Paseo Adelanto GENEEAXELRDOIDR J.32400 San Juan Capistrano, CA 92675 ROBERT L. AU DONALD H. RUSBIN DAVID R. CHAFFEE BARBARA H. EVANS Re: Disability Retirement of Michael L. O ••Uri•• Thompson, Soc. Sec. No. 566-70-1505 R-504 R-541 ✓ Dear Mr. Hale: The Retirement Administrator of the Orange County Employees Retirement System has referred the above -referenced matter to this office for appropriate action. we have reviewed your letter of September 28, 1978, in which you have stated that the City of San Juan Capistrano will not reimburse the Orange County Employees Retirement System for the present value of the disability retire- ment allowance payable to Michael L. Thompson, a former employee of the City. The present value of Mr. Thompson's disability retirement allowance, as calculated by the Retirement System's consulting actuary, is $108,177.27. In reviewing your letter, it appears that there may be some misunderstanding regarding the respective rights and obligations of the City and the Retirement System pursuant to the agreement of November 1, 1975. We have reviewed that agreement, as well as Mr. Thompson's retirement file, and the relevant facts appear to be as follows: Mr. Thompson was initially employed by the City of San Juan Capistrano on or about March 19, 1973. He remained continuously employed by the City until at least December 14, 1977, when he applied for a service -connected disability retirement. His applica- tion was subsequently granted. In 1975, the City adopted a resolution pursuant to Government Code Section 31557(b) to join the Orange County Employees Retirement System. The Board of Retirement subsequently approved the City's participation in the Retirement System. In accordance with Govern- ment Code Section 31564.5, the City and the Retirement System entered EXHIBIT AlDp 0 E. Phillip Hale Assistant City Manager City of San Juan Capistrano Page 2 October 16, 1978 into the agreement effective November 1, 1975, which set forth certain terms and conditions requiring the City to pay its share of the cost of providing retirement benefits for City employees. The con- dition which is now the subject of dispute is paragraph 1, which reads as follows: "All of CITY'S officers and/or employees shall be subject to medical approval of the County as determined by the results of physical examinations, and if any shall be found medically unqualified, CITY agrees, in consideration of membership of such person, to keep and hold the BOARD free and harmless from any liability for disability claims that may arise as a result of the aforesaid medical reasons, except to the extent of the employee's contributions. If an employee becomes entitled to a disability retirement allowance arising out of the condition for which the County deemed him or her unquali- fied, the CITY will be liable for all amounts of such retirement allowance, including survivor benefits and death benefits not funded by the employee and employer's contributions." At the time the foregoing agreement was entered into, the Board of Retirement was aware of the fact that the cost of providing disability retirement allowances for disabled employees has been steadily increasing. Many potential disability retirements can be avoided by comprehensive pre-employment physical exaiminations, which screen out prospective employees with physical conditions or impairments which are likely to lead to disabilities at some future date. Pursuant to Government Code Section 31009, the County of Orange has instituted a program of requiring certain prospective employees to execute disability retirement waivers as a condition of employment. If a prospective employee has an underlying physical impairment which in the opinion of the County's examining physician could eventually lead to a disability retirement, the County may require the prospective employee, as a condition of employment, to waive any right to a disability retirement based on such impairment or any aggravation thereof. We must emphasize, however, that disability retirement waivers may only be required of County employees at the time they are initially hired. There is no authority permitting the County to require existing employees to execute disability retirement waivers. EXHIBIT `'I)" E. Phillip Hale Assistant City Manager City of San Juan Capistrano Page 3 October 16, 1978 When the City of San Juan Capistrano joined the Orange County Employees Retirement System, Government Code Section 31557 speci- fically provided that all active employees of the City, including Mr. Thompson, would become members of the Orange County Employees Retirement System. The Retirement System had no authority to refuse membership to any individual City employee. Furthermore, the City had no authority to prevent any individual employee from becoming a member of the Retirement System. Section 31557 makes it clear that when a city or special district adopts a resolution to join a county retirement system, and the retirement board accepts such city or special district, all employees of the city or special district become members of that retirement system. This would include those active employees who might have physical impairments at the time they enter the retirement system. Furthermore, there is no authority whereby either the City or the Retirement System could have required any active employee of the City to execute a disability retirement waiver at the time of entry into the Retirement System. In order to protect the Retirement System from having to eventually pay disability retirement benefits to those City employees who had physical impairments at the time the City joined the System, the City and the Board of Retirement agreed to the inclusion of paragraph 1 in the agreement of November 11 1975. Pursuant thereto, each City employee entering the Retirement System was required to undergo a physical examination by the County. If in the opinion of the County's examining physician, an employee had a physical condition or impairment that would disqualify him from initial employment, the City of San Juan Capistrano would be required to pay the cost of any disability retirement which might eventually be granted as a result of such condition.. In your letter of September 28th, you state that ". . . the City of San Juan Capistrano must reject this claim on the grounds that the City was not notified at the time the City entered the Orange County Retirement System, of any requirement by the Board of Retirement that Michael L. Thompson sign a disability waiver, at that time, which would have precluded his application for a disability retirement for this alleged service -connected disability." In response to your letter, we must again emphasize that there is no legal authority whatsoever which would have permitted the City, the County, or the Retirement System to require Mr. Thompson to EXHIBIT "b 11 n U E. Phillip Hale Assistant City Manager City of San Juan Capistrano Page 4 October 16, 1978 0 execute a disability retirement waiver at the time he became a member of the Orange County Employees Retirement System. He was already an employee of the City, and Section 31557 required the Retirement System to accept him. It is our understanding that at the time he became a member of the Retirement System, the County's medical staff examined Mr. Thompson and found him to be medically unqualified for the position in which he was employed. Since he was already an active employee, he could not have been refused membership in the Retirement System, and he could not have been required to execute a disability retirement waiver. Mr. Thompson later received a service -connected disability retirement resulting from a job-related aggravation of the same condition which had made him medically unqualified for the job. Therefore, pursuant to the terms of the November 1, 1975 agreement between the City and the Retirement System, the City is obligated to pay the cost of Mr. Thompson's disability retirement. We consider the City's present refusal to pay the cost of Mr. Thompson's disability retirement to be a material breach of the agreement between the City and the Retirement System. We urge the City to reconsider its position in light of the information contained in this letter. The undersigned will be happy to answer any questions which the City might have. DHR:jh cc: Board of Retirement Very truly yours, ADRIAN XUYPER, COUNTY COUNSEL By Donald H. Rubin, Deputy EXHIBIT "D I - I , 32400 PASEO ADELANTO I N SAN JUAN CAPISTRANO. CALIFORNIA 92675 -- PHONE 493-1171 October 26, 1978 Donald H. Rubin, Esq. Deputy County Counsel Hall of Administration Post Office Box 1379 Santa Ana, California 92702 Re: Michael Thompson Disability Retirement Dear Mr. Rubin: Your letter of October 16, 1978, addressed to E. Phillip Hale was referred to the undersigned for reply. We too, accordingly, researched all of the relevant documents in the City's possession as well as those which were graciously made available to us by Thomas Bogdan. Our conclusions, however, differ materially from yours and impel us to concur with Mr. Hale's original position. Essentially, the City of San Juan Capistrano maintains that: THE CONCLUSION THAT NEITHER THE CITY NOR THE RETIREMENT BOARD HAD THE AUTHORITY TO REQUIRE MICHAEL THOMPSON TO EXECUTE A WAIVER IS, IN OUR OPINION, INCREDIBLE. If, indeed, neither the City nor the Board had a choice relating to membership in the Retirement System, what was the purpose of a physical examination? Why then did the Retirement staff ask that waivers be processed? As we perceive your reasoning, you are saying that: a. Michael Thompson was a City employee prior to the City's joining the County Retirement System and automatically became a member when the contract was made. b. The County would, however, give him a physical examination to see whether there were any disabling infirmities; the exam would, however, be purely informational because the City was already on the hook if he were disabled. EXHIBIT ''E,1 Donald H. Rubin, Esq. October 26, 1978 Page 2 C. The examination in fact shows that Michael Thompson is suffering from a back ailment which could ripen into a disability award; the County, however, doesn't really care because neither it nor the City has any choice, but we'll ask for a disability waiver anyhow... just in case. d. Michael Thompson does make a claim for disability, and the County Retirement Board processes his case without a word to the City and awards him $108,000. Justification: The dye was cast when the City elected to join the Retire- ment System; after that, the physicals, the waivers and the hearings were interesting but really meant nothing. THE CITY SHOULD HAVE BEEN NOTIFIED OF MICHAEL THOMPSON'S HEARING ON HIS APPLICATION FOR DISABILITY RETIREMENT. If the City was in fact responsible for any award made by the Retirement Board, should it not have been notified of (1) the application for retirement, and (2) the time and place of hearing? How else could the City have defended its position? Or are you intimating that the City of San Juan Capistrano had no alternative but to abide by the Retirement Board's ruling without benefit of representation? From the point of view of the City of San Juan Capistrano, the Retirement System's treatment of the Michael Thompson case is fraught with inconsistencies and irregularities. $108,000 is a substantial sum of money, and the City is not satisfied from your explanations that they are obligated to pay any part of the award. It would appear, in fact, that since the City was never made a part of any of the decision-making processes, the award was uni- laterally made by your Retirement Board. As for your feeling that the contract has been breached, the City certainly has serious reservations about being a part of a system which conducts its business in the manner demonstrated in the Michael Thompson case. Very truly yours, i James S. Okazaki /City Attorney JSO:ch EXHIBIT '1F OFFICES OF THE COUNTY COUNSEL County Of Orange COUNTY ADMINISTRATION BUILDING • P. O. BOX 1319 . SANTA ANA, CA 92102 November 1, 1978 James S. Okazaki, City Attorney City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 Re: Disability Retirement of Michael L. Thompson Dear Mr. Okazaki: ADRIAN K PER WILLIAM J. MCCOURT ROBERT F. NUTTMAN ARTHUR C. WAHLSTEDT. JR. JOHN W. ANDERSON L.AURENCE M. WATSON VICTOR T. BELLERUE JOHN R. GRISET 834-3300 CHARLES B. SEVIER WALTER D. WEBSTER IRYNE C. BLACK JAMES R. FLOURNOY TERRYC.ANDRUS TERRY E. DIXON EDWARD N. DURAN BARBARA TAM THOMPSON RICHARD D. OVIEDO O. M. MOORE JULE.E R. SAMS NATIVIDAD F. CHAVIRA BENJAMIN P. DE MAYO RONALD W. STENLAKE R. DONALD MCINTYRE HOWARD SERBIN M.TONIPERRY DANIEL J. DIDIER File Nos. R-504 R-541 ✓ Thank you for your letter dated October 26, 1978. We will forward a copy of your letter to the Board of Retirement, along with our recommendation for further action. From the tone of your letter, it appears doubtful that this controversy will be promptly resolved. However, your letter has raised certain questions which we feel should not go unanswered. The purpose of the medical examination of Michael Thompson in 1975 was to determine which entity would be financially respon- sible in the event,Mr. Thompson subsequently received a disability retirement. Under the terms of the agreement between the City and the Retirement System, the City would be financially responsible for a disability retirement based on a condition which already existed at the time the City joined the Retirement System. In order to determine whether or not Mr. Thompson had any such pre- existing condition, it was necessary to have Mr. Thompson undergo a County pre-employment physical examination at the time the City joined the Retirement System. We have located no authority which would have permitted either the City of San Juan Capistrano, the County of Orange, or the Orange County Employees Retirement System, to require Michael Thompson to execute a disability retirement waiver at the time the City joined the Retirement System. Government Code Section 31009 does not provide such authority. We would be pleased to consider any citation of authority you might wish to provide in support of a contrary position. EXHIBIT F Ll James S. Okazaki November 1, 1978 Page Two The City was not notified of a hearing on Mr. Thompson's disa- bility retirement application because there was no hearing. Based on Mr. Thompson's application and supporting materials, the Retire- ment Board found that he was entitled to a service -connected disability retirement. Under Government Code Section 31724, this was a decision to be made by the Retirement Board, and not by the employing entity. We are aware of no provision of law, or provision in the contract, which would have required the Retirement System to give the City notice of Mr. Thompson's pending disability retirement application, or permit the City to contest Mr. Thompson's application in an adversary proceeding. Again, we would be happy to consider any cita- tion of authority you might wish to provide in support of a contrary position. Moreover, our file shows that the City was advised of the pendency of Mr. Thompson's disability retirement application and given an opportunity to provide information to the Retirement System. In a letter from the City to the Retirement Office, dated March 21, 1978, it was stated: "The available information in our files shows that Mr. Thompson is unable to perform the major portion of his job." A copy of that letter is enclosed. Based on the foregoing facts, our position in this matter remains unchanged. DHR:mr Enclosure cc: Orange County Employees Retirement System Very truly yours, ADRIAN KUYPER, COUNTY COUNSEL BY ,�li.t-G/_.(��a�,�,'/ e/ �,(_t,: Doffald H. Rubin, Deputy EXHIBIT T n t -+ �`A \ ��/� /�•�(//.G ; fllllill �'��IJGl%lllilZl� 32600 PA5201AO A i� SAN JU'A'N{CA PtSTRANO, CALLkO RRAI)A 92675 >\ PHONEI<97t117 J P r� March 21, 1978 County of Orange Office of the Tax Collector -Treasurer Retirement Division P.O. Box 4515 Santa Ana. CA 92702 Attention: Thomas Bogdan In regards to your letter requesting information on Michael L. Thompson, social security number 566-70-1505, I am submitting the following. The available information in our files shows that Mr. Thompson is unable to perform the major portion of his job. His job duties require a large amount of lifting of heavy objects and bending. His doctors have placed a maximum of fifty pound weight load on his lifting and have advised against excess bending. Our files do not show what medication, if any, he is taking. Mr. Thompson is not working at this time and his last day of work was March 19, 1977. He is receiving Workman's Compensation disability payments at this time. As of my last conversation with Mr. Thompson, he has accepted a position with a private construction company and is working full time. Barbara Sutherland Administrative Services Department City of San Juan Capistrano EXHIBIT ��, ���n �P�Gfilir�rrd 32400 PA: SAN JUAN,.CAPISTRANO.CALIFORNIA 92675 'PHONE 493-1171' ` r > z January 11, 1980 rt Thomas Bogdan Retirement Administrator Office of the Tax Collector -Treasurer Retirement Division P. O. Box 4515 Santa Ana, California 92702 Re: Disability Agreement - Michael L. Thompson Dear Mr. Bogdan: At their meeting of January 9, 1980, the City Council approved the diasbility retirement agreement for Michael L. Thompson at $108,177.27. Enclosed are the original and four copies of the Settlement Agreement executed by the City. Upon completion by the appropriate person, we would appreciate the return of a fully -executed copy to this office. Very truly yours, '7 (MRS) MARY ANN HANOVER City Clerk MAH/cj Enclosures cc: Director of Administrative Services Agenda Item TO: James S. Mocalis, City Manager 41 January 9, 1980 FROM: E. Phillip Hale, Assistant City Manager and Director of Administrative Services SUBJECT: Disability Retirement Agreement - M.L. Thompson SITUATION: Attached is an original and four copies of a settlement agreement being requested by the Board of Retirement of the Orange County Employees Retirement System (OCERS). The agree- ment provides for a fair and equitable settlement of the service -connected disability retirement of city employee, Michael L. Thompson. FINANCIAL CONSIDERATIONS: Based on an actuarial study, the present value of the retire- ment benefits for M.L. Thompson is $108,177.27. The City has a disability reserve in the adopted 1979-84 Budget Document. ALTERNATE ACTION: 1. Approve and authorize the attached settlement agreement by the Mayor. 2. Do not approve the settlement agreement. 3. Delay approval of the settlement agreement. RECOMMENDATION: By motion, approve the attached settlement agreement and authorize the Mayor to sign the agreement on behalf of the City. Respectfully submitted, ��% E. Phillilli p alVe c Attachmhm ents FnR CITY COUNCIL .AGENDA Atta 04000 0 of �3 n U >i UNT,r of RECEIVED DEC 20 if 38 © c AN G E A CITY Cc SAIF JII.� N CAPISTRAWO OFFICE OF THE TAX COLLECTOR -TREASURER Retirement Division December 19, 1979 City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 ROBERT L. "BOB" CITRON COUNTY T„X COLLECTOR -TREASURER RETIREMENT OFFICE TELEPHONE: 834-2914 (714) 213 FINANCE BUILDING 630 NORTH BROADWAY SANTA ANA, CA MAILING ADDRESS: P. O. BOX 4515 SANTA ANA, CA 92702 Attention: E. Phillip Hale Assistant City Manager/Director of Administrative Services Dear Mr. Hale: Attached are an original and four copies of the contract that we would need signed in order to dismiss our lawsuit. If I do not hear from you by January 25, 1980, I will assume the City has rejected the contract. Sincerely, ORANGE COUNTY fMPLOYEES RETIRE T SYSTEM /Thomas Bogdan Retirement Administrator TB/lk Att. a/(%w���m C� ��lia�r7- 3Z400 3j400 PASEO Atl ELA NI'O; j SAN JUAN CAPISTRANO. CALIFORNIA 92675 493e•117)�xP{; February 8, 1979 Adrian Kuyper, County Counsel Donald H. Rubin, Deputy 10 Civic Center Plaza P. O. Box 1379 Santa Ana, California 92702 Re: Claim for Benefits Gentlemen: At their meeting of February 7, 1979, the City Council considered your claim for benefits. The Council respectfully denied your claim and referred same to the City's insurance carrier, Dan Gorman Insurance, 27041 La Paz Road,.Suite 2-c, Mission Viejo, California. A required Notice of Rejection is enclosed. Very truly yours, (MRS) MARX ANN HANOVER City Clerk MAH/cj Enclosure cc: City Attorney Dan Gorman Insurance Director of Administrative Services Ol�� ,.� ^CJ�7a? �'hwilZ !� , s y 32400 PASEO'.AO Et NTO' SAN n {`JLFAN�CAAPISTRANO" CA4IFORN y -HONE 493�117f'f � A-✓ < J February 8, 1979 Adrian Kuyper, County Counsel and Donald H. Rubin, Deputy 10 Civic Center Plaza P. O. Box 1379 Santa Ana, California 92702 Gentlemen: 92675 0 The Government Code requires a formal notice of rejection of your claim as follows: Notice is hereby given that the claim which was received on January 12, 1979 , in the amount of $108,177.27 , was rejected on February 7, 1979 ,,and was referred to the City's insurance carrier. WARNING: SUBJECT TO CERTAIN EXCEPTIONS, YOU HAVE ONLY SIX (6) MONTHS FROM THE DATE THIS NOTICE WAS PERSONALLY DELIVERED OR DEPOSITED IN THE MAIL TO FILE A COURT ACTION ON THIS CLAIM. SEE GOVERNMENT CODE SECTION 945.6. YOU MAY SEEK THE ADVICE OF AN ATTORNEY OF YOUR CIiOICE IN CONNECTION WITH THIS MATTER. IF YOU DESIRE TO CONSULT AN ATTORNEY, YOU SHOULD DO SO IMMEDIATELY. Sincerely, (MRS) MARY,,PN HANOVER City Clerk cc: Dan Gorman Insurance City Attorney 32400FASEO AOfLAN9 .' SAN JUAN CAPISTRANO. CALIFGRNIA 92675 PHONE. 691.1171 - January 15, 1979 Adrian Kuyper, County Counsel Donald H. Rubin, Deputy 10 Civic Center Plaza P. O. Box. 1379 Santa Ana, California 92702 Re: Claim of Board of Retirement of Orange County Employees Retirement System Gentlemen: Receipt of your Claim of January 11, 1979, submitted on behalf of the Board of Retirement of the Orange County Employees Retirement System, is hereby acknowledged. You will be notified of any further action to be taken regarding your Claim, which will be presented to the City Council on February 7th. Very truly yours, (MRS) MA�HANOVER City Clerk D1AH/c j CC. City Council City Manager City Attorney Dan Gorman Insurance 3 I