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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
PROVIDENCE, SC.                                                                                SUPERIOR COURT
(FILED - OCTOBER 20, 2010)
JOHN GALVIN                                                                                    :
                                                                                               :
v.                                                                                             :                C.A. No. PC 09-6797
                                                                                               :
EMPLOYEES’ RETIREMENT                                                                          :
SYSTEM OF THE STATE OF                                                                         :
RHODE ISLAND                                                                                   :
DECISION
DARIGAN, J.      John Galvin, a/k/a John Galvin, Jr.,  (“Appellant”) appeals from a
decision of the Board of the Employees’ Retirement System of Rhode Island (“Board” or
“ERSRI”).    The Board’s decision affirmed the Executive Director’s action granting
Appellant, as the beneficiary of his wife, Paula Galvin (“Mrs. Galvin”), the excess of her
total retirement contributions without interest, and not any further survivorship benefits.
Jurisdiction is pursuant to Rhode Island General Laws 1956 § 42-35-15.
I
Facts and Travel
In November 2007, Appellant received a letter from the Executive Director of
ERSRI, Frank Karpinski (“Mr. Karpinski”), which stated that Appellant was entitled only
to the excess of her retirement fund contributions, without interest, because Mrs. Galvin
did not select a retirement option as required by Rhode Island General Laws 1956 § 36-
10-18.   (Ex. 2, Denial Letter, November 20, 2007.)  Additionally, the letter explained that
all survivor annuity options ceased when she retired in December 2006 because Mrs.
Galvin did not select a Joint and Survivor Option on her Application for Retirement.   Id.
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Appellant contested this decision. Thus, pursuant to ERSRI procedures, a hearing
was held on February 21, 2009.                                                                   (ERSRI Decision, September 18, 2009 (“Decision”) at
2.)   The hearing consisted of testimony from Appellant and Mr. Karpinski, as well as
exhibits of notices and medical records.   Id. at 2-3.   Additionally, as allowed by ERSRI
Rules, both parties submitted post-hearing memoranda of law and Appellant submitted
post-hearing medical records.  Id. at 3.
Mrs. Galvin worked as a Supervising Nurse for the Department of Mental Health,
Retardation and Hospitals from 1972 through 2006.   (Admin. Hr’g Tr., February 21, 2008
(“Tr.”) at 6-8.)   In the summer of 2006, she was diagnosed with end stage renal failure
disease.   Id. at 7. She was unable to work by October 2006 as a result of the disease’s
progression.  Id.  at 8
During the hearing, Appellant testified about Mrs. Galvin’s positive and active
demeanor prior to her diagnosis.   Id. at 7.   He then described that she became confused,
forgetful, and irrational as the disease worsened.   Id. at 10-12.   In particular, she began
hiding bills under her bed and refusing to take her medication.  Id. at 14, 19.   He testified
that as of November  2006, Mrs. Galvin did not express any interest in the couple’s
finances and left them to Appellant because she lacked the mental capacity.  Id. at 23-24.
He explained that Mrs. Galvin, who was consistently in and out of the hospital, was
aware that her disease was terminal and a liver transplant was essential.  Id. at 11.
Appellant further testified that in December of 2006, Mrs. Galvin was unable to
operate a car and her friend declined to drive her to the Retirement Board.   Id. at 21-22.
She nevertheless arrived there by some unknown means on December  4,  2006 and
executed an Application for Retirement and an Option Selection Form.                             (Ex. 3, Option
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Selection Form; Ex. 4, Application for Retirement.)   On the Option Selection Form, Mrs.
Galvin selected neither of the Joint and Survivor Options.                                     (Ex.  4, Application for
Retirement.)   On the Application for Retirement, Mrs. Galvin listed Appellant in the
selection, “Beneficiary Information for Death Beneficiary only,” and signed and dated
the Application.                                                                               (Ex.  3, Option Selection Form)    These forms, however, were not
otherwise complete.   (Decision at 5.)
After completing these forms, her condition continued to worsen.  Id.  She was re-
admitted to Roger Williams Hospital four days later, on December 8, and remained there
until December 15, 2006.   Id.   The next day she arrived at the Mayo Clinic in Florida,
where she remained through December 20, 2006.   Id.   The Hearing Officer noted the
worsening of her physical problems during this period.   Id.   She was readmitted to Roger
Williams Hospital in January 2007 and died on January 27, 2007.   Id.   As a result of her
physical condition and his perception of her deteriorating mental state, Appellant asserted
that Mrs. Galvin could not have understood the consequences of electing a death benefit
option over a survivor’s annuity when she executed the forms.  Id.
Mr.  Karpinski  then  testified  about  the  justifications  for  his  decision  in  the
November 2007 letter.   He explained that Mrs. Galvin’s matter came to his attention
because she had not chosen an option.                                                          (Tr. at 36.)   During his testimony, he described a
typical  counseling  interview  when  an  applicant  chooses  his  or  her  option  and  the
information regarding such options that the counselor presents to the applicant during this
meeting.   Id. at 37-46.   Mr. Karpinski specifically noted that the counselors are not
trained in trying to assess the mental status of an applicant or the competency of the
applicant to make a selection from the options.  Id. at 45-46.
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After  explaining  the  possible  option  scenarios  and  the  Service  Retirement
Allowance (“SRA”), Mr. Karpinski testified about the numbers noted by the options SRA
and SRA Plus for Mrs. Galvin’s determination.   (Decision at 7.)   He confirmed that Mrs.
Galvin had filled out neither Option One nor Option Two.   Id.   Mr. Karpinski stated that
Option One is the joint survivor one hundred percent and Option Two also provides
survivor benefits.   Id.   Mrs. Galvin’s failure to choose either Option acted as an indicator
to ERSRI that she was not interested in them.   (Tr. at 50.)
He  then  explained  the  Application  for  Retirement  and  its  activation  of  the
termination process and establishment of a retirement date.                                        (Decision at 8.)   Although
her State Termination Form was unsigned, Mrs. Galvin’s termination date was listed as
December 31, 2006.   (Decision at 6; Ex. 4, Application for Retirement.)  He also testified
that it is necessary to be sure the termination date is correct on the State Termination
Form.                                                                                              (Tr. at 54.)   Mr. Karpinski explained that his November 2007 denial letter was
based  on  “the  lack  of  option  selection  form  that  designates  a  joint  option  that  is
available.” Id. at 55-56.
In his decision, the Hearing Officer made findings of fact prior to analyzing the
facts and law and making his final decision.                                                       (Decision at 8.)   He noted that he must
accord deference to ERSRI’s original denial of benefits because the Hearing Officer’s
decision was a review of an action within the agency’s responsibility.   Id. at 9.   The
Hearing Officer cited the various levels of Mrs. Galvin’s physical health, as well as her
anxiety and depression, as recorded in the medical records.   Id. at 11.   He highlighted,
however, the lack of evidence as to her mental capacity on December 4, 2006, the day
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that she executed the paperwork at the ERSRI offices.    Id.    He further declined to
speculate as to her mental state and thoughts on that day.  Id.
The Hearing Officer also examined the statute relied on by ERSRI, § 36-10-23(a).
Id. at 13.   He noted that he must accord deference not only to the agency’s determination
of facts, but also to its interpretation of a statute whose administration has been entrusted
to it.   Id.   Accordingly, the Hearing Officer found that he could not conclude that ERSRI
exercised erroneous or reversible judgment on the matter and affirmed its determination.
On November  12,  2009, the Disability Sub-Committee affirmed the decision of the
Hearing Officer (Admin. Hr’g Tr., Nov. 12, 2009, at 15.)   Appellant timely appealed to
this Court.
On appeal, Appellant argues that the Board’s affirmation of the Hearing Officer’s
decision was improper because Mrs. Galvin lacked the mental capacity to determine a
survivorship  benefit  when  she  executed  the  documents  at  the  Board’s  offices  on
December 4, 2006.   He maintains that if she had the capacity to make the decision, she
would not have chosen a benefit which only returns her pension contributions each month
without interest, but instead would have chosen a greater payment as a survivor’s benefit.
He  therefore  argues  that  the  record  lacks  the  substantial  evidence  to  support  the
affirmation of the Hearing Officer’s denial of death benefits to Mr. Galvin because the
facts demonstrate that she was too confused and incompetent to enter into a contract.
In response, ERSRI argues that § 36-10-23(a) is unambiguous and requires the
return of the contribution without interest when a joint and survivor option is not
selected.   ERSRI further contends that Appellant has not presented sufficient evidence of
Mrs. Galvin’s lack of capacity when she executed her Application for Retirement and
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Option Selection forms on December 4, 2006.   In addition, ERSRI argues that under its
statutory authority the Board cannot presume that members intend to choose particular
options.
II
Standard of Review
The Superior Court’s review of the decision of an administrative agency is
governed by the Administrative Procedures Act (“APA”), § 42-35-1, et seq.   Iselin v.
Retirement Bd. of Employees’ Retirement Sys. of R.I., 943 A.2d 1045, 1048 (R.I. 2008)
(citing Rossi v. Employees’ Retirement Sys. of R.I., 895 A.2d 106, 109 (R.I. 2006)).
Section 42-35-15(g) of the APA states:
“The court shall not substitute its judgment for that of the
agency as to the weight of the evidence on questions of
fact.   The court may affirm the decision of the agency or
remand the case for further proceedings, or it may reverse
or modify the decision if substantial rights of the appellant
have been prejudiced because the administrative findings,
inferences, conclusions, or decisions are:
(1)                                                                                           In violation of constitutional or statutory provisions;
(2)                                                                                           In excess of the statutory authority of the agency;
(3)                                                                                           Made upon unlawful procedure;
(4)                                                                                           Affected by other error or law;
(5)                                                                                           Clearly erroneous in view of the reliable, probative,
and substantial evidence on the whole record; or
(6)                                                                                           Arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion.”
In reviewing an agency decision, this Court is limited to an examination of the certified
record in deciding whether the agency’s decision is supported by substantial evidence.
Center  for  Behavioral  Health,  R.I.,  Inc.  v.  Barros,                                    710  A.2d  680,  684  (R.I.  1998)
(citations omitted).  Substantial evidence has been defined as “such relevant evidence that
a reasonable mind might accept as adequate to support a conclusion and means more than
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a scintilla but less than preponderance.”  Wayne Distrib. Co. v. Rhode Island Comm’n for
Human Rights, 673 A.2d 457, 459 (R.I. 1996) (citing Newport Shipyard Inc. v. Rhode
Island Comm’n for Human Rights, 484 A.2d 893, 896 (R.I. 1994)).   This Court may not
substitute its judgment for that of the agency as to the weight of the evidence on
questions of fact.   Interstate Navigation Co. v. Division of Pub. Utils. & Carriers of R.I.,
824 A.2d  1282,  1286  (R.I.  2003)  (citations omitted).   Thus, “if ‘competent evidence
exists in the record, the Superior Court is required to uphold the agency’s conclusions.’”
Autobody Ass’n of R.I. v. Rhode Island Dep’t of Bus. Regulation, et al., 996 A.2d 91, 95
(R.I. 2010) (quoting Rhode Island Pub. Telecommunications Auth. v. Rhode Island State
Labor Relations Bd., 650 A.2d 479, 485 (R.I. 1994))
ERSRI uses a two-tier review process in which a hearing officer hears grievances
and then issues a written decision, that is submitted to the Retirement Board.   The Board
considers the decision as well as any further briefs, and subsequently renders its own
decision.    ERSRI  Reg.                                                                        §  10.00(a).    This  two-tier  system  is  similar  to  a  funnel.
Environmental Scientific Corp. v. Durfee, 621 A.2d 200, 207-07 (R.I. 1993).  At the first
level of review, the hearing officer “sits as if at the mouth of the funnel” and analyzes the
evidence, issues, and live testimony.   Id.   At the second level of review, the “discharge
end” of the funnel, the Board only considers evidence that the hearing officer received
first-hand.   Id. Our Supreme Court has held, therefore, that the “further away from the
mouth of the funnel that an administrative official is . . . the more deference should be
owed to the fact finder.”   Id.   Determinations of credibility by the hearing officer, for
example, should not be disturbed unless they are “clearly wrong.”  Id. at 206.
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III
Jurisdiction
A threshold issue, raised by ERSRI as an affirmative defense in its answer to
Appellant’s complaint, is this Court’s jurisdiction to hear the instant appeal.   The APA
provides that an individual “who has exhausted all administrative remedies available to
him [or her] within the agency, and who is aggrieved by a final order in a contested case
is entitled to judicial review.”   Sec. 42-35-15(a).   In addition, an administrative appeal to
this Court must be filed “within thirty (30) days after mailing notice of the final decision
of the agency.” Sec. 42-35-15(b).
When  exhaustion  is  statutorily  mandated,                                                      “a  plaintiff  aggrieved  by  a  state
agency’s action first must exhaust administrative remedies before bringing a claim in
court.”   Richardson v. Rhode Island Dept. of Educ.,  947 A.2d  253,  259  (R.I.  2008)
(citations  omitted).    Adherence to the  exhaustion  doctrine                                   “aids  judicial  review by
allowing the parties and the agency to develop the facts of the case, and . . . promotes
judicial economy by avoiding needless repetition of any administrative and judicial
factfinding, perhaps avoiding the necessity of any judicial involvement.’”   Downey v.
Carcieri,  996 A.2d  1144,  1150-51  (R.I.  2010)  (quoting Doe v. East Greenwich Sch.
Dept., 899 A.2d 1258, 1266 (R.I. 2006) (citations omitted)).
In this case, Appellant has, in fact, exhausted all of the administrative remedies
available to him.   The governing rule of appeals procedures for ERSRI, Section 10.00 of
the Employees’ Retirement System of Rhode Island Regulation 4, provides in pertinent
part:
“(a)    After  consideration  of  the  decision  of  the
Hearing  Officer  and  such  other  matters  as  shall  be
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presented by counsel for any party to the proceeding, the
Retirement Board shall make a decision . . .
“                                                                                             (b)   Any person aggrieved by the decision of the
Retirement Board shall have all rights of an aggrieved party
under . . . the Administrative Procedures Act . . .                                           .”
In the instant case, Appellant is appealing the Retirement Board’s decision that was based
on the decision of the Hearing Officer.    He has, therefore, adhered to  §  10.00 and
properly exhausted his administrative remedies before appealing to this Court.    The
Retirement Board issued its decision on November 12, 2009, and Appellant appealed
within the APA required thirty days, on November 27, 2009.   Accordingly, Appellant’s
administrative appeal is properly before the Court.
IV
The Board’s Decision
A
Section 36-10-23(a)
On appeal, Appellant argues that ERSRI should have chosen an option which
provides for a greater payment as a survivor benefit because Mrs. Galvin did not choose
an option.  ERSRI responds that § 36-10-23(a) requires the return of contribution without
interest when a joint and survivor option is not selected.   Thus, it contends, that it may
not, under the statute, presume a member’s choice.
Our Supreme Court has held that the General Assembly has construed ERSRI
with the authority, pursuant to § 36-8-3,1 to operate and administer the state retirement
system.   See Perrotti v. Soloman, 657 A.2d 1045, 1048 (R.I. 1995).   Furthermore, it is
1 Section 36-8-3 provides in part: “The general administration and the responsibility for
the proper operation of the retirement system and for making effective the provisions of
chapters 8-10 of this title are here by vested in a retirement board.”
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established  in  Rhode  Island  that                                                              “an  administrative  agency  will  be  accorded  great
deference in interpreting a statute whose administration and enforcement have been
entrusted to the agency.”    State v. David Cluley,  808 A.2d  1098,  1103  (R.I.  2002)
(quoting In re Lallo, 768 A.2d 921, 926 (R.I. 2001)).   As ERSRI is responsible for the
operation of § 36-10-18(a), this Court must accord great deference to its interpretation.
Under this deference, this Court must examine ERSRI’s interpretation of § 36-10-
23(a)  and  then  examine  whether  the  application  of  facts  to  this  statute  is  clearly
erroneous.  Section 36-10-23(a) states the following:
“Upon the death of a member after retirement, unless the
member shall have selected any of the options provided in
§  36-10-18, a benefit shall be payable consisting of the
excess, if any, of the total contributions of the member at
date  of  retirement,  without  interest,  over  the  aggregate
amount of all retirement allowance payments received by
the member prior to his or her death.”
When the language of a statue is clear and unambiguous, a court “must interpret the
statute literally and must give the words of the statute their ordinary meanings.”   Iselin,
943 A.2d at 1049 (quoting Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d
1223, 1226 (R.I. 1996)).   The Board’s interpretation of the plain language in § 36-10-
23(a) as granting a survivor only the total contributions of the member at the date of
retirement, without interest, if the member does not select an option is consistent with
both the text and the intent of the legislature.   Thus, the Board’s interpretation cannot be
classified as clearly erroneous or unauthorized in light of Perrotti.   See 657 A.2d at 1048;
see also Auto Body Ass’n of R.I., 996 A.2d at 97 (finding that a trial justice should defer
to an agency’s reasonable interpretation of a statute even if the trial justice would have
resolved it differently).   Accordingly, this Court finds that ERSRI’s interpretation of its
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statutory authority to pay only the total contributions, without interest, was in accordance
with § 36-10-23(a) and thus not in excess of its statutory authority.
B
Capacity to Contract
Appellant also argues that the Board lacked substantial evidence to sustain the
Hearing Officer’s decision because the evidence demonstrates that Mrs. Galvin was not
capable of entering into a contract.   In response, ERSRI contends that Appellant failed to
present sufficient evidence of her lack of capacity on December 4, 2006.
This  Court  may  not  substitute  its  judgment  for  that  of  the  Board’s  on
determinations of credibility and questions of fact.      See Interstate Navigation Co., 824
A.2d at 1286.   Thus, “if ‘competent evidence exists in the record, the Superior Court is
required to uphold the agency’s conclusions.’”   Auto Body Ass’n of R.I., 996 A.2d at 95
(quoting Rhode Island Pub. Telecommunications Auth., 650 A.2d at 484).   Therefore, in
the instant case, the Court must defer to the Board’s judgment that the record reflects
that—despite their discussions of Mrs. Galvin’s depression, anxiety, and confusion—
neither  the  medical  records  nor  Appellant’s  testimony  displayed  that  she  did  not
understand the nature or consequences of her acts on December 4, 2006.  See id.; Durfee,
621 A.2d at 208 (discussing significant deference owed to the fact-finder in a two-tier
administrative process);  (Decision at  10-11.).   The record does not contain evidence
contradicting this finding to make the decision clearly erroneous.
Appellant further asserts that the Board should have presumed that Mrs. Galvin
would have chosen an option that provides for greater survivor benefits if she had the
capacity to contract.   Conversely, ERSRI argues that § 36-10-23(a) does not allow it to
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presume lack of capacity or a choice that the member would have made.   An agency may
only act within the statute that defines its powers.  Iselin, 943 A.2d at 1050 (quoting In re
Advisory Opinion to the Governor,  627 A.2d  1246,  1248  (R.I.  1993)).    The Board,
therefore, may not act beyond its statutory authority in § 36-10-23(a).  Thus, requiring the
agency to find that Mrs. Galvin would have chosen another option would be in excess of
that authority, which plainly mandates ERSRI’s action if a member does not choose an
option.   Accordingly, ERSRI’s refusal to expand the limits of the statute is not clearly
erroneous.
V
Conclusion
After a review of the entire record, the Court finds that the Retirement Board’s
affirming ERSRI’s denial of Appellant’s survivor benefits was neither in violation of its
statutory  authority,  nor  clearly  erroneous  in  view  of  the  reliable,  probative,  and
substantial evidence on the whole record.   Substantial rights of Appellant have not been
prejudiced.   This Court, therefore, affirms the Board’s decision and denies the appeal.
Counsel shall submit appropriate judgment for entry.
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