STEPHANIE T. TREJO, Petitioner,
NC DEPARTMENT OF STATE TREASURER RETIREMENT SYSTEMS DIVISION, Respondent.
in the Court of Appeals 9 August 2017.
by respondent from judgment entered 1 August 2016 by Judge
Jerry R. Tillett in Dare County Superior Court No.
Vincent Law Firm, P.C., by Branch W. Vincent, III, for
Attorney General Joshua H. Stein, by Deputy Solicitor General
James W. Doggett, for respondent-appellant.
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.
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.
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.
and Procedural History
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.
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."
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
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 ...