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Trejo v. NC Department of State Treasurer Retirement Systems Division

Court of Appeals of North Carolina

November 7, 2017

STEPHANIE T. TREJO, Petitioner,
v.
NC DEPARTMENT OF STATE TREASURER RETIREMENT SYSTEMS DIVISION, Respondent.

          Heard in the Court of Appeals 9 August 2017.

         Appeal by respondent from judgment entered 1 August 2016 by Judge Jerry R. Tillett in Dare County Superior Court No. 15-CVS-286.

          The Vincent Law Firm, P.C., by Branch W. Vincent, III, for petitioner-appellee.

          Attorney General Joshua H. Stein, by Deputy Solicitor General James W. Doggett, for respondent-appellant.

          DIETZ, JUDGE.

         Stephanie Trejo was injured while working as a public school teacher and began receiving long-term disability benefits from the State Disability Income Plan. Four years after she started receiving those benefits, the State informed her that it had overpaid her. By law, the State was required to offset Trejo's state benefits by the amount of benefits Trejo hypothetically could have received had she been awarded Social Security disability benefits. Trejo had applied for Social Security disability, but the Social Security Administration concluded that she was not disabled.

         Trejo challenged the State's attempt to recoup these alleged overpayments in an administrative proceeding, but the administrative law judge rejected her arguments. She appealed to the trial court and prevailed. As explained below, we reverse the trial court and reinstate the judgment of the administrative law judge.

         The applicable statutory provision-an earlier version of the law currently in place-required the State to apply the hypothetical offset for Social Security disability. Moreover, before Trejo began receiving her state benefits, the State informed her of the possibility that it would need to apply this offset and seek recoupment if it overpaid her. Trejo signed a form acknowledging that she understood these facts. Thus, the equitable doctrines of estoppel, laches, and waiver do not bar the State's efforts to apply the offset and recoup the overpayment, despite the State's four-year delay in discovering the overpayments and seeking recoupment.

         Facts and Procedural History

         In 2002, Stephanie Trejo was injured while employed by the State as a public school teacher and vested in the State Disability Income Plan for state employees.

         In 2006, Trejo applied for disability benefits from the Social Security disability program. The Social Security Administration denied Trejo's request for Social Security disability, concluding that she "was not under a disability, as defined in the Social Security Act."

         That same year, Trejo began the process of applying for long-term disability benefits from the State Disability Income Plan. The State approved Trejo's request for long-term disability benefits, retroactive to 2004, but Trejo did not complete the paperwork required to receive disability payments at that time. In 2009, Trejo completed her paperwork and the State began paying her long-term disability, including retroactive payments for benefits that accrued since 2004.

         In July 2013, more than four years after the State first began paying long-term disability benefits to Trejo, the State mailed her a letter informing her that it had mistakenly failed to apply a statutory offset based on the hypothetical Social Security disability benefits she might have received. The letter informed Trejo that this offset should have occurred beginning in January 2008. Trejo challenged her reduction of benefits in an administrative proceeding at the Office of Administrative Hearings. An administrative law judge entered summary judgment in favor of the State and Trejo sought judicial review ...


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