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RISK MANAGEMENT, INC. MPERS Litigation – Analysis of MPERS’ Frequently Asked Questions In the November edition of the Louisiana Municipal Review, we provided you with FAQs regarding the Municipal Police Employees’ Retirement System (MPERS), and their initiated litigation against several Louisiana municipalities across the state. This litigation alleges noncompliance with their protocols for signing up certain municipal law enforcement employees into their retirement system. The decision not to settle any claim (or suit) by MPERS against your municipality has been, is, and will be, the municipality’s decision. Your municipality is free to agree with the terms of the “amended resolution” and any “settlement agreement” at any time. The attorneys retained by RMI to provide defense, and guidance, to our LMRMA participant municipalities have never indicated otherwise. The legal and financial exposures brought about by the MPERS litigation are so potentially severe to all possible targeted Louisiana municipalities, that we also provided a copy of MPERS’s FAQs through our comprehensive email delivery system. Since publication, our team of defense attorneys has analyzed the discussed FAQs, and the following are the results of this review. Is membership in MPERS mandatory? Yes, membership in MPERS is mandatory pursuant to RS. 11:2214 if the conditions therein are met. Can an officer required to be a member of MPERS opt out? Yes, under certain circumstances, set forth in R.S. 11:157, the officer can elect to not become a member of MPERS only if: 1) The municipality covers its employees with social security; and 2) The municipality has not specifically excluded its employee police officers from MPERS, but 3) The police employee must enroll in MPERS, and his/her membership remains in effect until the appropriate affidavit is prepared and filed by the employee under RS 11:157(c). But what if the municipality is paying social security on its chief? A chief of police, who meets the definition of “employee” pursuant to R.S. 11:2213(11) must be enrolled in MPERS (unless the requisite conditions of RS.11:157 have been met), even if the municipality is paying social security. Can a municipality force an elected chief to enroll in MPERS if he/she does not want to? Probably not. An elected chief of police is a municipal officer, but not an employee. At least one Attorney General Opinion indicates that a municipality does not have the authority to even investigate an elected chief. The Supreme Court has held no municipality may revoke any inherent power of an elected marshal (or chief). At least one Court of Appeals has held an elected chief has a cause of action to sue when a mayor tries to dismiss police personnel, even though they may be municipal employees. If a mayor cannot dismiss employees of a department of an elected chief, it is difficult to envision how the municipality can force an elected chief to sign documents, if the elected chief refuses. MPERS claims on their FAQ page that AG Opinions exist supporting their claim that they can reach back 10 years. Where are those opinions? Great question. We don’t know. We’ve asked for them through our attorneys, and thus far, MPERS has declined to produce them. However, we’ve looked too, and we can’t find them. Below is a QR Code to the results of a Westlaw search in the Attorney General Opinions database. 36 opinions in total appear, with all contained in the QR Code within this article. None support the claim that MPERS can “reach back for ten years.” What are retirement contributions considered under Louisiana law? Contributions to a retirement plan are a form of deferred compensation. If retirement contributions are “deferred compensation,” is the right to claim them subject to prescription? The Supreme Court and Courts of Appeal have held, multiple times, that a 3-year prescription period applies to claims involving retirement plan contributions: (Please note that some operating systems may produce a pop up when accessing the QR Code. If your system does produce a pop up, simply click on “Block” to open the file.) “We reaffirm our previous statements that contributions to retirement plans are a form of deferred compensation. Consequently, we find that the plaintiff’s claim is one for compensation for services rendered. The applicable prescriptive period, then, is found in La. C.C. Art. 3494, which provides that an action for the recovery of compensation for services rendered is subject to a liberative prescription of three years.” The trial court found that the applicable prescriptive period is the ten-year period for personal actions. In Fishbein v. State ex rel. Louisiana State University Health Sciences Center, 04-2482, p. 8 (La.4/12/05), 898 So.2d 1260, 126, the Supreme Court stated: Page 26 LMR | DECEMBER <strong>2023</strong>
“Contributions to retirement plans are a form of deferred compensation. Consequently, we find that the plaintiff’s claim is one for compensation for services rendered. The applicable prescriptive period, then, is found in La. C.C. Art. 3494, which provides that an action for the recovery of compensation for services rendered is subject to a liberative prescription of three years.” In Deshotel v. Village of Pine Prairie, 09-670 (La. Ap. 3Cir. 12/9/09), 26 So.3d 975, this court addressed a similar controversy involving a Pine Prairie police officer who, in 1991, was misinformed about his MPERS eligibility and was consequently never enrolled in the state-wide retirement plan. This court specifically found that Pine Prairie officials breached a duty to the plaintiff by giving him inaccurate information, but that, nevertheless, his claim was subject to the threeyear prescriptive period set forth in La. Civ. Code Art. 3494. Therefore, we held that when “Deshotel filed suit in June 2007, the only claims that had not been prescribed were those from June 2004 forward.” Similarly, in Fishbein, the Supreme Court held that the three-year prescriptive period governing a state employee’s cause of action against her employer for unpaid retirement contributions began to run upon receipt of the first paycheck in 1980, which did not include the full contribution. Consequently, the Fishbein plaintiff’s August 2000 suit was prescribed as to all claims arising prior to August 1997. Accordingly, the trial court found that since the last plaintiff’s date of enrollment occurred in 2002 and this suit was not filed until 2007, beyond the three-year prescriptive period, the claim has prescribed. This court is cognizant that the plaintiffs have suffered a significant loss, but we are restricted by the law, the facts, and the standard of review. Therefore, after a review of the record in light of the applicable law, we do not find that the trial court was clearly wrong in her determination that the plaintiffs knew or should have known by the date of their enrollment in the retirement system and accordingly, the case is prescribed. What carries more weight - Attorney General Opinions or case law? Attorney General Opinions, though highly regarded, are Attorney General Opinions or advisory only, and not binding. We have recognized them as persuasive authority, particularly where no cases on point exist. At least one Attorney General Opinion recognizes the potential impact of the previously cited cases of Fishbein, Deshotel, and Coker on MPERS contributions. We hope that this analysis of the MPERS FAQs will assist all Louisiana municipalities in their individual assessment of the financial exposure brought about by the MPERS litigation situation. As previously mentioned, defense services are provided to LMRMA Liability Fund members which are covered for Public Officials E&O coverage at no cost, under a reservation of rights. If your municipality has been impacted by the MPERS litigation and you are provided E&O coverage through RMI, please feel free to contact me directly at 1-800-843-0931 or pcronin@rmila.com. RMI – Providing risk and coverage related services to Louisiana municipalities for over 35 years! Sincerely, Patrick Cronin, CPCU, AIC, AIM, AAI, ARM, CWCP General Manager – Risk Management, Inc. LMR | DECEMBER <strong>2023</strong> Page 27
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