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Marango v. Kentucky Retirement Systems
Court of Appeals of Kentucky
October 13, 2017
ROBERT MARANGO APPELLANT
KENTUCKY RETIREMENT SYSTEMS AND BOARD OF TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS APPELLEES
FROM FRANKLIN CIRCUIT COURT HONORABLE PHILLIP SHEPHERD, JUDGE
ACTION NO. 11-CI-001758
Hoskins BRIEFS FOR APPELLANT
Katherine Rupinen Frankfort, Kentucky BRIEF FOR APPELLEE:
BEFORE: J. LAMBERT, STUMBO, AND TAYLOR, JUDGES.
LAMBERT, J., JUDGE
Marango appeals from the Franklin Circuit Court order denying
his request for interest on the judgment awarded to him for
an improper reduction in his retirement benefits. We affirm.
factual and procedural history of Marango's conflict with
the Kentucky Retirement Systems is best summed up by this
Court in Marango's first appeal:
Marango was a hazardous member of the Kentucky Employees
Retirement System (KERS), administered by KRS pursuant to his
employment with the Department of Fish and Wildlife
Resources. While employed, Marango filed an action in Meade
Circuit Court against his employer for failure to pay him
overtime during fiscal years 1998-1999 through 2003-2004.
Prior to trial, the parties entered into a negotiated
settlement agreement, which was memorialized through a court
order entered on July 8, 2008.
The order specified the Department of Fish and Wildlife would
pay $40, 000 to Marango through two $20, 000 payments, which
would "be treated as unpaid overtime compensation
subject to applicable state and federal withholdings
[.]" The Commonwealth of Kentucky was ordered to credit
the first $20, 000 payment "as though made in the fiscal
year ending June 30, 2008[, ] for purposes of retirement
calculation." The remaining $20, 000 was to be paid
within twenty days of Marango's resignation, so long as
he retired by August 1, 2009, as required by the settlement
Both parties abided by the terms of the settlement agreement.
The Department of Fish and Wildlife Resources paid Marango
his regular salary and lump sum payments through regular
payroll in 2008 and 2009. During the time Marango received
both his salary and a lump sum payment, the Department of
Fish and Wildlife Resources reported to KRS the total amount
paid to Marango each payroll period as part of Marango's
creditable compensation earned during that month in
accordance with the then current 105 KAR [Kentucky
Administrative Regulation] 1:140 § 1(1) (2009). The
Department of Fish and Wildlife Resources treated these
payments as creditable compensation by deducting
Marango's employment contributions for retirement from
these payments as required by KRS [Kentucky Revised Statute]
61.543(1) and KRS 61.560(2). It also reported these payments
as wages on Marango's 2008 and 2009 W-2 forms.
Pursuant to KRS 61.510(14)(c), as a hazardous member of KERS,
Marango's final compensation was calculated based on his
three highest paid years of service. Because the Department
of Fish and Wildlife Resources reported the lump sum payments
to KRS when paid, two of Marango's highest years were the
years in which he received the lump sum payments.
Initially, KRS advised Marango the lump sum payments would be
included in the calculation of his compensation for the final
three years of employment. Marango began receiving retirement
benefits accordingly. Later, KRS decided the payments should
be treated as severance/lump sum bonus payments which would
be creditable compensation averaged over Marango's total
years of qualifying service pursuant to KRS 61.510(13).
Marango sought to clarify that the Meade Circuit Court order
entering the negotiated settlement agreement was awarding him
back pay and moved for CR 60.02(f) relief. In granting this
relief, the Meade Circuit Court clarified and amended its
settlement order to specify the payments were compensation
for unpaid overtime and not severance pay or a lump sum
bonus, and were wages reportable as earnings to Marango for
years 2008 and 2009.
KRS ultimately reclassified the payments as "unpaid
overtime" then calculated the percentage of unpaid
overtime compensation claimed for each calendar year and
applied those percentages to the monies actually received to
determine "Marango's creditable compensation for the
fiscal years 1998-1999 through 2003-2004[.]"
Recalculating Marango's creditable compensation from the
lump sum payments to credit them when earned rather than ...
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